An electronic shop bought generators (for resale and not personal use). this means cash account will be credited because money has gone out of the business for the purchase of generators. And in return, purchase account (stock) will be debited because goods have come into the company in leu of the purchase.
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equipment price = 18000
salvage value after 8 years useful life = 2000
If in 1996 ( 3 years later) it is sold for 8000, hence we have
18000 - 8000 = 10000
This means that, the quiptment was suppose to have been sold for 10,000 instead it was sold for 8,000. this shows a N2000 loss
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