Gain or loss on disposition be reported on income statement

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Reference no: EM13827274

Perfect Auto Rentals sold one of its cars on January 1, 2013. Perfect had acquired the car on January 1, 2011, for $23,400. At acquisition Perfect assumed that the car would have an estimated life of three years and a residual value of $3,000. Assume that Perfect has recorded straight-line depreciation expense for 20011 and 2012.

Required:

1. Prepare the journal entry to record the sale of the car assuming the car sold for:

a. $9,800 cash

b. $7,500 cash

c. $11,500 cash

2. How should the gain or loss on the disposition (if any) be reported on the income statement?

Reference no: EM13827274

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