A company bought a computer for $1,500. Three years later, the computer was sold for $300. Assuming a 5-year estimated service life and straight-line depreciation, which account(s) would be used to record the disposal of the assets? Select all that applies.

A. Accumulated depreciation

B. Gain/loss on sale of asset

C. Depreciation Expense

D. Fixed Assets

E. Sales Income

Answer:- B and E

Both B and E are the correct option. Gain/loss on sale of asset and Sales Income

What is a disposal account?

A disposal account is a temporary account used to record the removal or sale of an asset, typically at the end of its useful life or when it’s no longer needed. This account helps in tracking gains or losses resulting from the disposal. When an asset is sold, the disposal account captures the difference between the asset’s book value (cost minus accumulated depreciation) and the amount received from the sale. If the selling price exceeds the book value, a gain is recorded; if it’s less, a loss is recorded. The disposal account ensures accurate representation of an entity’s financial position and performance.

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