How to Record a Journal Entry for a Sale of Business Property?
When you sell property that you use in your small business, such as buildings, furniture or machinery, you must record the transaction in your accounting system to show whether the sale resulted in a gain or loss. In a journal entry, you must remove the original cost of the property and its accumulated depreciation from your records. Depreciation is an expense recorded to reflect the wear and tear on the property over time, decreasing the property’s original value. So basically, you’re subtracting the accumulated depreciation from the original cost of the property, then subtracting that amount from the sales price. The result reflects whether your company made a profit or took a loss on the sale of the property.
