A truck costing $56,000 has accumulated depreciation of $50,000.The truck is scrapped for $500.The journal entry to record this transaction is to:

Question

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The cost of the truck is $56,000 and the accumulated depreciation is $50,000. Therefore, the book value of the truck is $6,000 ($56,000 - $50,000). When the truck is scrapped for $500, there is a loss on disposal of $5,500 ($6,000 - $500). The journal entry to record this transaction would be to debit Cash for $500, debit Accumulated Depreciation - Truck for $50,000, debit Loss on Disposal for $5,500 and credit Truck for $56,000. This entry will properly record the disposal of the truck and the resulting loss.

A Truck Costing $56,000 Has Accumulated Depreciation of $50,000