On January 1, 2012, Skyline Limousine Co. purchased a limo at an acquisition cost of $28,000. The vehicle has been depreciated by the straight-line method using a 4-year service life and a $4,000 salvage value. The company's fiscal year ends on December 31.
Instructions
Prepare the journal entry or entries to record the disposal of the limousine assuming that it was:
(a) Retired and scrapped with no salvage value on January 1, 2016.
(b) Sold for $5,000 on July 1, 2015.