Record the Sale of Macho Taco's Food Truck with an Exciting Twist!
What are the adjusted balances of Macho Taco's Food Truck on February 28, 2020?
According to the accounts, the adjusted balances are as follows:
- Food Truck: $50,000
- Accumulated Depreciation: $28,250
What is the journal entry to record the sale of the food truck for $21,750?
What would the journal entry look like for this transaction? Let's find out!
Adjusted Balances:
The adjusted balances of Macho Taco's Food Truck on February 28, 2020, were $50,000 for the Food Truck account and $28,250 for the Accumulated Depreciation account.
Journal Entry for Sale of Food Truck:
The journal entry to record the sale of the food truck for $21,750 would be as follows:
Date | Account | Debit | Credit
March 01 | Cash | $21,750 |
March 01 | Accumulated Depreciation | | $28,250
March 01 | Food Truck | | $50,000
March 01 | Gain on Sale of Asset | | $1,000
When Macho Taco sells the food truck for $21,750, the entry is recorded by debiting Cash for the sales proceeds and crediting Accumulated Depreciation to remove the accumulated depreciation on the food truck. The Food Truck account is debited to remove the asset from the books, and a Gain on Sale of Asset account is credited for the difference between the sales price and the book value of the food truck.
The entry ensures that the sale of the food truck is properly recorded in the accounting records, reflecting the cash received and removing the related asset and accumulated depreciation. The Gain on Sale of Asset account captures any profit made on the sale.
When it comes to recording transactions like the sale of assets, it's essential to have accurate and detailed journal entries to reflect the financial impact on the business. By debiting and crediting the appropriate accounts, the accounting records stay organized and transparent.
In this case, Macho Taco's exciting sale of the food truck for $21,750 resulted in a gain on the asset, showcasing a successful business move. The journal entry captures this profit and ensures that the sale is properly documented for financial reporting purposes.