Sold Furniture Journal Entry

Furniture

Furniture is classified as a long-term asset and typically has a depreciation period of five to ten years. Furniture and fixtures are movable items that are used to furnish an office, such as bookcases, chairs, desks, filing cabinets, and tables.

These items are recorded on an organization’s balance sheet as a long-term asset and must be depreciated over the expected useful life of the asset. The balance in this account can be significant for administrative businesses like insurance companies, as they often purchase large amounts of furniture and fixtures.

When furniture is sold, the journal entry is a debit to the cash account and a credit to the furniture and fixtures account. The difference between the book value and the sale price is recorded as either a gain or a loss, depending on the sale price.

Sold Furniture

A transaction of merchandise has been completed. On the seller’s side, the furniture was inspected before the sale and is considered to be in good condition. The furniture was then sold for a fair price, and the payment was received in full. The seller has now completed their responsibilities and the furniture is no longer in their possession.

On the buyer’s side, the furniture was received in good condition and the payment was made in full. The buyer is now responsible for the furniture and has the right to use and enjoy it.

Benefits of the sold furniture:

• For the seller:
  • Received payment in full
  • Relieved of responsibility for the furniture
• For the buyer:
  • Received furniture in good condition
  • Gained the right to use and enjoy the furniture

The transaction was beneficial to both parties, and the furniture is now in the possession of the buyer.

Sold Furniture Journal Entry

The completion of a merchandise transaction has resulted in a journal entry of debit cash, debit accumulated depreciation, credit cost, and credit gain (or debit loss). This journal entry is commonly used when a business sells furniture.

For example, when a company sells a desk for $500 that originally cost $1,000 and had accumulated depreciation of $600, this journal entry would be used. The journal entry would debit cash for $500, debit accumulated depreciation for $600, credit cost for $1,000, and credit gain for $100.

This is illustrated in the following table:

This entry is essential for a company to properly record its transactions and accurately reflect its financial position. It is also important to note that the gain or loss amount is based on the difference between the cash received and the cost of the item. This entry should be completed and recorded to maintain an accurate and complete financial statement.

Conclusion

The sale of furniture is an important transaction to record in accounting records.

The amount of the debit and credit should be equal, and the sale should be recorded at the time of the transaction.

By accurately recording the sale of furniture in the journal entries, businesses can keep a clear and accurate record of all transactions.

This, in turn, will help in the efficient management of financial data and provide an accurate representation of the company’s financial position.