CPA Accountant Review Questions

Category - Accounting

Petey’s Printing discards a copier that it purchased for $100,000. If the machine’s accumulated depreciation is $99,000, what would the journal entry be to record the disposal?
  1. Debit Accumulated Depreciation of Copier, $99,000; credit Copier, $100,000; credit Loss on Disposal of Copier, $1,000.
  2. Debit Accumulated Depreciation of Copier, $99,000; credit Copier, $100,000; debit Loss on Disposal of Copier, $1,000.
  3. Credit Accumulated Depreciation of Copier, $99,000; debit Copier, $100,000; debit Loss on Disposal of Copier, $1,000.
  4. Debit Accumulated Depreciation of Copier, $99,000; debit Copier, $100,000; credit Loss on Disposal of Copier, $1,000.
  5. Credit Accumulated Depreciation of Copier, $99,000; credit Copier, $100,000; debit Loss on Disposal of Copier, $1,000.
Explanation
Answer - B - The following entries would be made to record the copier being destroyed:

Debit Accumulated Depreciation of Copier, $99,000
Credit Copier, $100,000;
Debit Loss on Disposal of Copier, $1,000.

Key Takeaway: When in doubt, use T-accounts to illustrate the transaction. This will eliminate answers that are not possible, due to the total of the debits not equaling the total of the credit entries.
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