A company has a vehicle with a cost of Rs20,000 and accumulated depreciation of Rs17,000 which was sold for Rs 5,000 cash. To record the entry for the sale of the vehicle, which of the following is correct?

Debit cash account Rs 5000 & credit vehicle account by Rs 2000 & Gain on sale of asset account by Rs 3000

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Debit cash account Rs 5000 & credit vehicle account by Rs 3000 & Gain on sale of asset account by Rs 2000

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Debit cash account Rs 2000 & credit vehicle account by Rs 2000 & Gain on sale of asset account by Rs 3000

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Credit cash account Rs 5000 & debit vehicle account by Rs 2000 & Gain on sale of asset account by Rs 3000

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Solution

The correct option is B
Debit cash account Rs 5000 & credit vehicle account by Rs 3000 & Gain on sale of asset account by Rs 2000

Particulars Amount

Sale Value 5000

Book Value 3000 (20000-17000)

Profit 2000 (5000-3000)

The entry is going to be

Cash a/c Dr 5000

To Gain on sale of asset a/c 2000

To Vehicle a/c 3000

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