Motor Sales Sold Its Old Office Furniture for $6000

question 141

Multiple Choice

Motor Sales sold its old office furniture for $6000.The original cost was $16,000,and at the time of sale,accumulated depreciation was $14,000.What is the effect of this transaction?

• A) gain of $6000
• B) gain of $4000
• C) loss of $4000
• D) loss of $6000

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Definitions:

Adjusting Entry

Journal entries made in accounting records at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred.

Closing Entry

An accounting action that transfers the balances from temporary accounts to permanent ones at the end of an accounting period.

Owner's Equity

The residual interest in the assets of an enterprise after deducting its liabilities; represents the owner's claims against the company's assets.

Income Summary

An account to which the revenues and expenses are transferred in order to calculate the net income for the period, ultimately transferring to retained earnings.