Question

Equipment in general governmental service that had been acquired several years ago by a special revenue fund at a cost of $40,000 was sold for $15,000 cash. Accumulated depreciation of $30,000 existed at the time of the sale. The journal entry to be made in the governmental activities journal will include all of the following except CHAPTER 5

A. A debit to Cash for $15,000.
B. A debit to Accumulated Depreciation for $30,000.
C. A credit to Equipment for $40,000.
D. A credit to Other Financing Sources for $5,000.

Answer 1

The journal entry to be made in the governmental activities journal will include all of the following except a credit to Other Financing Sources for $5,000.

Step-by-step explanation:

The journal entry to be made in the governmental activities journal will include all of the following except a credit to Other Financing Sources for $5,000. The correct journal entry for this transaction would be:

1. A debit to Cash for $15,000
2. A debit to Accumulated Depreciation for $30,000
3. A credit to Equipment for $40,000

The sale of the equipment for $15,000 cash would result in a debit to Cash, representing the increase in cash, and a debit to Accumulated Depreciation, representing the reduction in the accumulated depreciation of the equipment. The credit to Equipment would be made to remove the equipment from the books. There is no need for a credit to Other Financing Sources as this transaction does not involve any external financing or funding.