FedEx is the world’s largest express transportation company. In addition to the world’s largest fleet of all-cargo aircraft, the company has more than 650 aircraft and 58,000 vehicles and trailers that pick up and deliver packages. Assume that FedEx sold a delivery truck that had been used in the business for three years. The records of the company reflected the following:

Delivery truck cost .......................... $35,000
Accumulated depreciation .............. 23,000

Required:

1. Give the journal entry for the disposal of the truck, assuming that the truck sold for

a. $12,000 cash

b. $12,400 cash

c. $11,500 cash

2. Based on the three preceding situations, explain the effects of the disposal of an asset.