Question

Assume cost of an asset is 20000 and it’s accumulated depreciation is 18000 and the asset sold to birr 5000&1000 purpose journal entry for sale asset

Answer 1

The journal entry for the sale of the asset would be as follows:

Debit: Accumulated Depreciation - Asset (18,000)
Debit: Loss on Sale of Asset (2,000)
Debit: Cash (5,000)
Debit: Accounts Receivable (1,000)
Credit: Asset (20,000)

Explanation of the journal entry:
- The Accumulated Depreciation - Asset account is debited to remove the accumulated depreciation of 18,000.
- The Loss on Sale of Asset account is debited with the difference between the cost of the asset (20,000) and the sale price (5,000).
- Cash is debited for the cash received from the sale (5,000).
- Accounts Receivable is debited for the amount to be received later (1,000).
- The Asset account is credited to remove the cost of the asset (20,000).