Small Business Bookkeeping & Accounting

Small Business
Bookkeeping & Accounting

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Sale of Assets

This is where you account for assets you sell or dump. If you sell a vehicle, you have its value on that up to date list of assets you keep. You also have a record of how much it has been depreciated. You enter the cash you make off that sale in 1001, cash. Then you balance that entry with a credit to the asset account and a debit to the accumulated depreciation account, and whatever it takes to make those number balance is your gain, or loss, on that sale.

Say you sold a truck which you bought for $6,780. It has depreciated by $3,200. You managed to get someone to pay you $5,400. The entry to record this sale would be as follows:

	Debit	Credit
1001 Cash	$5,400
1300 Fixed Assets - truck		$6,780
1301 Accum. Depreciation	$3,200
7100 Gain (or loss) on the sale		$1,820

If your balancing entry had been a debit, it would have meant you lost money on the sale. Here's how to think about it: You paid $6,780. On your books, its value had decreased by $3,200, meaning you had expensed out that amount of money over the period of time you had the truck. So, to you it's actually worth $3,580, and you sold it for $5,400, which was a gain of $1,820.