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Bookkeeping – How to enter the transaction to sell an asset?
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Published on Friday, 03 April 2015 21:55
Client called and asked how to enter the transaction to sell an asset – a car purchased for $60,000 in the business books.
First raise an invoice (service type) to the buyer with GST for $50,000 and allocate to Sale of Assets (need to create the account in the # 4’s (MYOB) or Sales (Quickbooks) with this name. The other side of the sale invoice is automatically to Trade Debtors (as you are owed the money).
When you are paid, you process the Receive Payment which draws from Trade Debtors and deposits to the bank.
Now there is still the $60,000 in the asset, but with the $50,000 sale, this means a $10,000 loss.
What is the next step to deal with these amounts?
Since the cost of the asset was in the balance sheet, we are left with balances in the asset and a loss in this scenario still to be dealt with. The way to finish off the sale is to raise the following general journal.
DR Sale of Asset 50,000 Sale account
CR Loss on Sale of Asset 50,000 Create an expense account
DR Loss on Sale of Asset 60,000
DR Accum. Depn – Asset 0 (Enter what is on the Bal Sheet if a figure there)
CR Asset (at cost) 60,000
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