Patch Company sold some office furniture for $4,800 cash. The furniture cost $31,500 and had accumulated depreciation through the date of sale totaling $29,300. The journal entry to record the sale of the furniture will include a:

Question

Quizplus · Accepted Answer

The gain or loss on the sale of an asset is calculated as the difference between the sale price and the book value of the asset. The book value is the cost minus accumulated depreciation. Here, the book value is $31,500 - $29,300 = $2,200. Since the furniture was sold for $4,800, there is a gain of $4,800 - $2,200 = $2,600. Therefore, the correct entry includes a credit to Gain on Sale of Furniture for $2,600.

Patch Company Sold Some Office Furniture for $4,800 Cash