Which of the Following Is the Correct Journal Entry for the Sale

question 106

Multiple Choice

Which of the following is the correct journal entry for the sale of a machine for $10,000 that had originally cost $25,000 and had $12,000 of accumulated depreciation on the date of sale?
A. Dr. Cash $\quad 10,000$
$\quad$ Dr. Accumulated depreciation $\quad 12,000$
$\quad$ Cr. Machine $\quad 22,000$
B. Dr. Cash $\quad 10,000$
$\quad$ Dr. Accumulated depreciation $\quad 12,000$
$\quad$ Dr. Loss on sale $\quad 3,000$
$\quad$$\quad$ Cr. Machine $\quad 25,000$
C. Dr. Cash $\quad 10,000$
$\quad$ Dr. Accumulated depreciation $\quad 12,000$
$\quad$ Dr. Gain on sale $\quad 3,000$
$\quad$$\quad$ Cr. Machine $\quad 25,000$
D. Dr. Cash $\quad 10,000$
$\quad$ Dr. Loss on sale $\quad 15,000$
$\quad$$\quad$ Cr. Machine $\quad 25,000$

• A)Option A
• B)Option B
• C)Option C
• D)Option D

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Definitions:

Straight-Line Method

A method of calculating depreciation by evenly spreading the cost of an asset over its useful life.

Functional Currency

The currency of the primary economic environment in which an entity operates, typically the currency in which it principally generates and expends cash.

Cash Dividend

A payment made by a corporation to its shareholders, usually in the form of cash, as a portion of the corporation’s earnings.

Foreign Subsidiary

A company that is partially or wholly owned but is located in a different country than the parent company, subject to the laws and regulations of the country in which it operates.