As part of a renovation of its showroom, O' Keefe Auto Dealership sold furniture and fixtures that were eight years old for $3,500 in cash. The assets had been purchased for $40,000 and had been depreciated using the straight-line method with no residual value and a useful life of ten years.

a. Prepare a journal entry to record this transaction.

b. Show how the sale of the furniture and fixtures affects the balance sheet and income statement using the financial statement effects template.