Help with Disposal account

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alexnwa
alexnwa Registered Posts: 21
in Advanced Bookkeeping
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.

Comments

  • Bran278
    Bran278 Registered Posts: 36 Regular contributor ⭐
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    I don't think you need to put the cost of the new vehicle in the debit side of the disposal account.
  • Bran278
    Bran278 Registered Posts: 36 Regular contributor ⭐
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    That amount would just be debit vehicle account and credit bank.
  • Cheesypeesy
    Cheesypeesy Registered Posts: 101
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    Bran is right. We're also missing the amount the old vehicle was actually sold for.
    Matthew Dearlove MAAT
    Currently on CIMA Management Level. Passed P2, F2 and E2. Preparing for November 19 MCS.
  • alexnwa
    alexnwa Registered Posts: 21
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    Thank you @bran278 @Cheesypeesy for your input.

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