Accounting entries

From Wikicpa

Contents 1 Depreciation 2 Notes Payable 3 Sale of Assets 4 Also see

Depreciation

Account Description	Debit	Credit
Depreciation Expense	$1,000
Accumulated Depreciation		$1,000

This entry has the effect of recording an expense by charging the depreciation account. This charge is then included as one of the operating expenses of the business. The credit is to the Accumulated Depreciation (AD) account. The AD account is carried to the balance sheet andis deducted from the fixed asset total, thereby reporting both the cost of the fixed asset and the accumulated depreciation to date.

Notes Payable

Account Description	Debit	Credit
Cash	$1,500
Notes Payable		$1,500

Obligations in the form of a written promissory note.

Sale of Assets

Account Description	Debit	Credit
Cash	$9,000
Accumulated Depreciation	$7,500
Asset		$14,500
Gain on Disposal of Assets		$2,000

Assets may be retired voluntarily or disposed of by sale, exchange or involuntary conversion. Normally the disposal of an asset results in a 'book' gain or loss because depreciation is a process of cost allocation and not a process of valuation. The above example reports a gain due to the the estimation of the deprecation being overstanded as compared to the actual decline of the assets fair market value.

Also see

• Adjusting entries