Chapter 8, Problem 8.16E

Recording the Disposal of an Asset at Three Different Sale Prices

LO8-5 FedEx is the world’s leading express-distribution company. In addition to the world’s largest fleet of allcargo aircraft, the company has more than 650 aircraft and 55,000 vehicles and trailers that pick up and deliver packages. Assume that FedEx sold a delivery truck that had been used in the business for three years. The records of the company reflected the following:

Delivery truck cost	$35,000
Accumulated depreciation	23,000

Required:

1. 1. Give the journal entry for the disposal of the truck, assuming that the truck sold for
   1. a. $12,000 cash
   2. b. $12,400 cash
   3. c. $11,500 cash
2. 2. Based on the three preceding situations, explain the effects of the disposal of an asset.