Question

Stormin' Norman's Resort sold two golf carts for a total of $1,000 in order to raise cash. The resort's managers had originally bought the carts for a total of $6,000. The accumulated depreciation on both carts was $4,000. The resort's managers will have to record a _______ of _______ on the sale of these carts.

Answer 1

Stormin' Norman's Resort will have to record a loss of $1,000 on the sale of two depreciated golf carts that were sold for $1,000 but had a book value of $2,000.

Step-by-step explanation:

The student's question revolves around a transaction involving the sale of two golf carts and the resulting financial implication for Stormin' Norman's Resort. The resort sold the carts for $1,000 total, while the original purchase price was $6,000 for both. With accumulated depreciation amounting to $4,000, the book value of the carts at the time of sale would be the original cost minus the accumulated depreciation, which is $2,000 ($6,000 - $4,000). Since the carts were sold for $1,000, this results in a loss of $1,000 ($2,000 - $1,000). Therefore, the resort's managers will have to record a loss of $1,000 on the sale of these carts.