help please!! so confused

hanapospis

Hi Everyone!!

Just wonder if anybody can help me. I am revising for my FRA exam and I got stuck on past paper from June 2007. Section 2 d. Can anybody help please?

A vehicle has been disposed of during the year.
The original cost 12000
Accumulated depreciation 5250
Vehicle was sold for 5000.This amount was credited to sales and debit to the bank account.
You have to make all the adjustments required to deal with this disposal.

What I have done:
Disposal: DR disposal 12000 / CR Vehicle ac 12000
DB Accumulated Dep'n 5250 / CR disposal 5250

Sale: DB Bank ac. 5000 / 5000 CR Disposal

so I have 1750 loss on sale

But I do not understand how can I credit sales and debit bank account.. As I need to enter the sale on CR of Disposal ac

on ETB in answers why do they are debited Sales and there is no debit entry on Bank ac? Why do they decrease the sales???? so confused and I thought I did understand disposal of fixed assets

....... :crying::crying::crying:

visha

The debit to bank of £5000 has already been done.

Why are you doing it the second time? – Dr Bank £5000 and Credit Disposal £5000

The fact that it was credited to the Sales a/c doesn’t mean that the entries are wrong. It means that there was an error. It should have been credited to the Disposal a/c.

The examiner here is trying to kill two birds with one stone! Disposal accounts and Errors.

Correct the error by debiting the Sales a/c with £5000 and credit the Disposal a/c with £5000. As done on the extended TB.