When a company sells machinery at a price equal to its book value,this transaction will be recorded with an entry that would include which of the following?
A) Dr Cash and accumulated depreciation$\quad $ $\quad $ $\quad $ Cr Machinery
B) Dr Machinery$\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ Cr Cash and accumulated depreciation
C) Dr Cash and machinery$\quad $ $\quad $ $\quad $ $\quad $ Cr Accumulated depreciation
D) Dr Cash and depreciation expense$\quad $ $\quad $ Cr Accumulated depreciation

Question

Quizplus · Accepted Answer

When a company sells machinery at a price equal to its book value, the entry would be to debit Cash and Accumulated Depreciation and credit Machinery. This is because the company is receiving cash (asset) and recognizing the reduction in the value of the machinery (accumulated depreciation). Option A is the only answer that reflects this. Option B records the transaction as if the company sold the machinery for more than its book value, which would result in a gain. Option C records the transaction as if the company sold the machinery for less than its book value, which would result in a loss. Option D records the wrong accounts - Depreciation Expense is an expense account, not an asset or liability account.

When a Company Sells Machinery at a Price Equal to Its