Perfect Auto Rentals sold one of its cars on January
Perfect Auto Rentals sold one of its cars on January 1, 2011. Perfect had acquired the car on January 1, 2009, for $23,400. At acquisition Perfect assumed that the car would have an estimated life of three years and a residual value of $3,000. Assume that Perfect has recorded straight-line depreciation expense for 2009 and 2010.

Required:
1. Prepare the journal entry to record the sale of the car assuming the car sold for (a) $9,800 cash, (b) $7,500 cash, and (c) $11,500 cash.
2. How should the gain or loss on the disposition (if any) be reported on the income statement?
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