On April 1 of the Current Year,a Company Disposed of an Automobile

question 104

Essay

On April 1 of the current year,a company disposed of an automobile that had cost $20,000.The auto had a salvage value of $2,000 and a useful life of 5 years.The accounting records showed accumulated depreciation for this automobile of $8,100 as of April 1 of the current year.The asset was discarded after an accident occurred and $10,500 cash was received from an insurance claim.
Prepare the journal entry to record the disposal of the automobile.

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Definitions:

Common Stock

A form of corporate equity ownership, representing a claim on a portion of the company's profits and assets.

Additional Paid-in Capital

The amount of equity in a company that shareholders have contributed in addition to the nominal or par value of the shares.

Financing Activities

Transactions related to raising capital and repaying shareholders, including issuing equity and taking on loans.

Cash Flow Statement

A financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, dividing activity into operating, investing, and financing activities.