Equipment costing $47,500 with a book value of $22,500 is sold for $26,000. The journal entry will involve a ___________ to Accumulated Depreciation.

Question

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The equipment's book value was $22,500, and it was sold for $26,000, so there is a gain on sale of $3,500 ($26,000 - $22,500 = $3,500). To remove the equipment from the books, the following journal entry needs to be made:
Debit Cash: $26,000
Debit Accumulated Depreciation: $25,000
Credit Equipment: $47,500
The debit to Accumulated Depreciation is necessary to remove the accumulated depreciation on the asset from the books. Since the asset was sold for more than its book value, there is a gain on sale, which will be credited to the Income Statement.

Equipment Costing $47,500 with a Book Value of $22,500 Is