Answer to Question #273886 in Accounting for Abdu

Question

On September 30th, Company “A” sold a vehicle for 20,000 . to company “B”, the historical cost for the vehicle was 100,000 . and its accumulated depreciation was 90,000 . at the time of sale. What are the required Journal entries to be made in both companies?

Answer 1

Solution:

Journal entries for company A:

Dr. Cash A/c                                         20,000

Dr. Accumulated Depreciation A/c     90,000

             Cr. MV A/c                                                   100,000

             Cr. Gain on disposal of equipment A/c         10,000

(To record the sale of a vehicle to company B)

 

Journal entries for company B:

Dr. MV A/c                                           20,000

                 Cr. Cash A/c                                               20,000

(To record the purchase of a vehicle)