Cash Receipt Entry for Asset Items That Are Sold
When you dispose of an asset item by selling it, a cash receipt transaction is automatically posted for it when you process the disposal in .
The cash receipt records:
- The cash received for the sale of the asset item.
- The reversal of the asset item's general ledger balances for accumulated depreciation and the asset account.
- Any gain or loss if the asset item is not fully depreciated when it is disposed.
The following accounts are debited and credited:
| Account | Debited | Credited |
|---|---|---|
| Accumulated Depreciation | X | |
| Asset | X | |
| Cash | X | |
| (Loss) | X | |
| Gain | X |
General ledger entries are made to your GL book and not to any additional books that you may have set up.
Example
Asset item A has a useful life of 24 months and is depreciated using the straight-line method.
You processed depreciation for the asset item for 12 months.
You dispose of the asset item on the 13th month and sell it for $2,000 cash.
The following table shows the entries for the asset item in the Equipment Info Center for the general ledger book and an additional book, if you have one set up.
| General Ledger Book | Additional Book | |
|---|---|---|
|
Acquisition Cost
From the GL Cost and Additional Book tabs in the Equipment Info Center |
$10,500 | $10,500 |
|
Business Use Percent
From the GL Cost and Additional Books tabs in the Equipment Info Center |
100% | 100% |
| Net Cost | $10,500.00 | $10,500.00 |
|
Additional Cost
From the Additional Books tab in the Equipment Info Center |
Does not apply | $1.00 |
|
Salvage Value
From the GL Cost and Additional Books tabs in the Equipment Info Center |
$500.00 | $500.00 |
|
Additional First Year Depreciation
From the Additional Books tab in the Equipment Info Center |
Does not apply | $100.00 |
|
Section 179
From the Additional Books tab in the Equipment Info Center |
Does not apply | $100.00 |
|
Depreciation Basis
From the GL Cost and Additional Book tabs in the Equipment Info Center |
$10,000.00 | $9,801.00 |
The following table is a summary that shows 12 months of depreciation for asset A and the amount that you received when you sold asset A.
| General Ledger Book | Additional Book | |
|---|---|---|
|
Accumulated Depreciation for 12 Months
For GL Book, this was posted to your general ledger when you processed depreciation. |
$5,000 | $4,900.50 |
| Disposal (amount not depreciated when the asset item is disposed) | $5,500.00 | $5,400.50 |
| Gain or (Loss) | ($3,500.00) | ($3,400.50) |
| Sold for $2,000 cash | $2,000.00 | $2,000.00 |
The following table shows the accounts that are debited and credited for your GL Book when you run disposal processing for asset item A and a cash receipt is automatically posted.
| Account | Amount Debited | Amount Credited |
|---|---|---|
| Accumulated Depreciation | $5,000.00 | |
| Cash | $2,000.00 | |
| Asset | $10,500.00 | |
| Gain or (Loss) | $3,500.00 | |
| TOTAL | $10,500.00 | $10,500.00 |