Ravi runs a bicycle repair shop and must record five entries connected with non-current assets at his year end. Complete the table to identify, for each ent...

Disposal entries follow a single logic. The disposal account is opened to bring together everything about the asset being sold: the cost is transferred in, the depreciation already charged on it is transferred in, the proceeds are brought in, and whatever balance is left is the profit or loss.

Why each line takes that form:

1. The annual charge records an expense of the year and increases the running total written off the tool set, which is why accumulated depreciation is credited rather than the asset account itself.
2. The welder is taken out of the cost account and gathered in the disposal account, so the cost moves as a debit into disposal, matching the debit balance it held in the cost account.
3. Depreciation relating to an asset no longer owned is removed and set against that cost, so it moves as a credit into disposal, matching the credit balance it held in the accumulated depreciation account.
4. Money comes in, so cash is debited, and the proceeds reduce what remains to be accounted for in the disposal account.
5. The debit balance left on the disposal account is a loss, so it is charged against profit through the income statement.

The middle two transfers are the ones most often reversed. Both exist to empty the two asset accounts of everything relating to the welder, so each amount moves into disposal on the same side as the balance it is clearing.

The final row would run the other way for a profit: a profit leaves a credit balance on the disposal account, so disposal is debited and the income statement credited.

Total .