ACCA Applied Knowledge · Financial Accounting · General ledger accounts and journal entries
Tandy Co's office equipment account had an opening debit balance of $60,000. During the year, equipment costing $15,000 was purchased on credit, and equipment with a cost of $9,000 was sold. What is the closing balance on the office equipment cost account?
The closing balance is $66,000 debit. Start with the opening $60,000, add the $15,000 purchase on the debit side, and remove the disposed equipment at its original cost of $9,000 by crediting the account.
- A$84,000 debit
- B$66,000 debitCorrect
- C$36,000 debit
- D$51,000 debit
Explanation
Opening $60,000 plus additions $15,000 less disposals at cost $9,000 gives $66,000 debit. The disposal is credited to the cost account at original cost. Adding the disposal ($84,000) is the wrong-sign error.
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