Equipment with a historical cost of $100,000 and Accumulated Depreciation of $100,000 is junked.Which journal entry is necessary?

Question

Quizplus · Accepted Answer

When equipment is junked, it is removed from the company's books. The journal entry necessary is to debit the Accumulated Depreciation - Equipment account for the amount of accumulated depreciation and credit the Equipment account for the original cost of the equipment. In this case, the equipment had a historical cost of $100,000 and Accumulated Depreciation of $100,000, so the entry should be to debit Accumulated Depreciation - Equipment for $100,000 and credit Equipment for $100,000. Choice D is the only option that correctly reflects this entry.

Equipment with a Historical Cost of $100,000 and Accumulated Depreciation