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the black limo company (blc) sold a limo that had been used in it operations. the limo cost $48,000, had accumulated depreciation of $20,000, and was sold for $26,000. the journal entry to record the disposal of the limo includes a account. multiple choice question.

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varshamittal029

The following journal entry will be passed:

                    Bank A/C Dr.                                           $26,000

                    Accumulated Depreciation A/C Dr.       $20,000    

                    Loss on sale of Limo Account Dr.          $2,000

                                              To Balck Limo company A/C $48,000

Working Notes:

It has been given that,

                   Cost of Limo = $48,000

                    Accumulated Depreciation - $20,000

                    Sale Price of Limo = $26,000

It can be clearly seen that, when we deduct the depreciation, which has been accumulated since many years, from the cost of the limo, i.e.  $48,000 - $20,000 = $28,000. We get the remaining value of the value to be $28,000 as calculated. But the limo is then sold for an amount i.e., $26,000, which is lower than its current value, $28,000.

Since the sale value is less than the current value of the limo, there is a loss of $2,000 ($26,000 - $28,000).

Therefore, the loss of $2,000 will be debited to the loss in sale of limo account.

Learn more about Accumulated Depreciation here: https://brainly.com/question/1287985

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