Abbott landscaping purchased a tractor at a cost of $27,000 and sold it three years later for $14,400. abbott recorded depreciation using the straight-line method, a five-year service life, and a $3,500 residual value. tractors are included in the equipment account.

1. record the sale. (if no entry is required for a transaction/event, select "no journal entry required" in the first account field.)

2. assume the tractor was sold for $9,400 instead of $14,400. record the sale. (if no entry is required for a transaction/event, select "no journal entry required" in the first account field.)

Please see explanation

Explanation:

The Net book value of the tractor after three years of the purchase is given as follow:

Net book value= Cost - Accumulated depreciation for three years

                         =27,000-((27,000-3,500)/5*3)

                         =27,00-14,100

                         =$12,900

1. The journal entry to be recorded in respect of sales of tractor is given below:

                                           Debit                        Credit

Bank                                   $14,400

Accumulated depreciation $14,100

((27,000-3,500)/5*3)

Tractor                                                                  $27,000

Gain on sale of asset                                           $1,500

2. If the asset was sold for $9,400 instead of $14,400, then the following journal entry shall be made:

                                             Debit                        Credit

Bank                                     $9,400

Accumulated depreciation $14,100

Loss on sale of asset          $3,500    

Tractor                                                                  $27,000

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