Transfer of profit on disposal to P&L

sarahuk3sarahuk3 Feels At HomeRegistered Posts: 31
Hiya,

I'm a bit stuck and wondered if anyone can help!?

In my dipsoals account i have a profit on sale of £1250 (ie DR) so my c/d balance will be £1250 CR.

I have transferred this to trial balance as Disposals account 1250 CR, but where do i put the 1250 DR (as profit on sale) at the moment by TB balances but if i put a 1250 dr in, this will not balance....?? can anyone tell me where i am going wrong please?

Many Thanks

Sarah

Comments

  • CJCCJC Font Of All Knowledge Registered Posts: 1,657
    Have you made the appropriate other double entries from the disposal account correctly - debiting bank and accumulated depreciation and crediting whatever account the original acquisition cost is recorded in? There's an example of how this works «here» which might be of use.

    By the way, you might find you get more responses to this kind of question posting in the Student Discussion > Intermediate area of the forum.

    HTH
  • MonsoonMonsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,069
    sarahuk3 wrote: »
    In my dipsoals account i have a profit on sale of £1250 (ie DR) so my c/d balance will be £1250 CR.

    I have transferred this to trial balance as Disposals account 1250 CR, but where do i put the 1250 DR (as profit on sale) at the moment by TB balances but if i put a 1250 dr in, this will not balance....?? can anyone tell me where i am going wrong please?

    The reason you are going wrong is that you want to put a Dr in without a corresponding Cr.
    It is shown as a profit in the P&L and the disposals account should be nil:

    TB shows assets reduced by original cost
    Depn reduced by amount claimed on disposed asset
    Bank or Debtors increased by value of the sale
    The balancing figure on the TB is your 1250 CR in Disposals.

    At this point your TB balances, or should do.

    Journal:

    DR Disposals 1250
    CR P&L Profit on Sale of Assets 1250

    Disposals account should be nil - it doesn't appear in the accounts, only the profit/(loss) on sale does.

    Remember you remove profit/(loss) on sale from any Tax Comp as it's capital.

    Hope that helps :)
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