Help with Disposal account

alexnwa

The original cost of a vehicle was £5000 excluding vat and accumulated depreciation was £1000.
A new vehicle was acquired at the cost of £2500 plus VAT.

Please, prepare a disposal account.

My solution below

Debit side
Original cost £5000
Bank £2500
Balance £7500

Credit side
Disposal £5000
Accumulated depreciation £1000
Loss of disposal £1500
Balance £7500.

Please, just want to know whether I'm in the right direction.

Bran278

I don't think you need to put the cost of the new vehicle in the debit side of the disposal account.

Bran278

That amount would just be debit vehicle account and credit bank.

Cheesypeesy

Bran is right. We're also missing the amount the old vehicle was actually sold for.

alexnwa

Thank you @bran278 @Cheesypeesy for your input.