hul wa da t r cash proceed4 8000 Wo Truel wa purchased durin

hul wa da. t r cash proceed,?4 8000. Wo Truel wa purchased during He ushprocds Dt 4 300D. toss wn dis posal of Hhe tucl 19 3000. 1?u portion on the Notes anc?Bonds-palable. will becoune due next (par(2014)??/0,000, our

Solution

Answer

Truck sold for $ 8000 at $ 3000 loss on disposal.

This means that book value of Truck sold = 8000 + 3000 = $ 11,000

---Truck with cost (book value) of $ 11,000 was sold for $ 8,000, hence making a loss of $ 3,000.

---Journal Entry would be:

Account Title

Debit

Credit

Cash

$             8,000.00

Loss on Disposal

$             3,000.00

Truck

$                     11,000.00

---Loss on disposal will go in Income Statement as ‘expenses’.

The portion that is due next year is ‘short term’ in nature and will have to be classified as “Current Liabilities”.

Hence, portion on the Notes & bonds payable becoming due next year of $ 10,000 will be reclassified as CURRENT LIABILITIES on the Balance Sheet.

Account Title	Debit	Credit
Cash	$             8,000.00
Loss on Disposal	$             3,000.00
Truck		$                     11,000.00