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On March 4, 2001, you sold a truck outright for $5,000. At the time of the sale, you made the following entry in your sales and cash receipts journal: |
Adjusting for Sales of Fixed Assets
Did you sell any fixed assets during the year? If so, you probably need to make an adjusting entry in your general journal to properly account for the sale. You may need to have your accountant help you with this type of transaction.
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| Debit | Credit | |
| Cash | 5,000 | |
| Gain on sale of asset | 5,000 |
The truck had a cost of $24,000. As of December 31, 2000, you had taken $20,500 of depreciation on the truck. The adjusted basis of the truck is $3,500 ($24,000 cost minus $20,500 depreciated). Therefore, you have a gain of $1,500 on the sale ($5,000 received minus $3,500 basis). Make the following adjusting entry to take the truck off your books and reflect the correct amount of gain (or loss) on the sale:
| Debit | Credit | |
| Gain on sale of asset | 3,500 | |
| Accum. depr. truck | 20,500 | |
| Truck | 24,000 | |
| To adjust for sale of truck on 3/4/2001 | ||