Loss on sale of Fixed Asset

Let’s take a practical example to see how to pass journal entry for sale of fixed assets--

Mady bros. who is into the business of Manucturing electrical goods, sold Machine for Rs. 1,50,000.00 which was bought 3 months ago for Rs. 1,80,000.00 .

Now the entry can be made as under :

• Cash Rs. 1,50,000 Dr
  

Machinery Rs. 1,50,000 Cr

(Being sale of furniture)

• Accu. depreciation account Rs. 4,500 Dr
  

Machinery Rs. 4,500 Cr

(Being 10% dep. for 3 months )

• loss on sale of assets Rs. 25,500 Dr
  

(Under indirect expenses)

Machinry A/c Rs. 25,500 Cr

(Being loss suffered on sale of fixed assets)

In the above example, you will see that Machinery account is squared off

Now final entry will be the:-

Cash A/c - 1,50,000 Dr
Acc. Depreciation A/c- 4,500 Dr
Loss on sale of Fixed Asset - 25,500 Dr

Machinery A/c 1,80,000 Cr

(Being loss on sale of fixed asset ) ;)