 We're going to say now the equipment is fully depreciated, but we got $500 and received at the disposal. So now we dispose of this piece of equipment, but we got $500, just basically scrap for the disposal process. In that case, we're going to do the same type of thing. We're going to go over here and say, well, is cash affected? That'll be our first thought process. We're going to say, yeah, we got cash. Cash is a debit balance. It's going to go up, so we'll do the same thing to it, another debit. So it's just like any other transaction, we probably want to think of cash first, and if it's affected, then we can do that really easily and say that cash, we know that's part of our journal entry. And then the second part is just what we had before. We know that we need to take the equipment off the books. We know that we need to take accumulated depreciation off the books, and they're fully depreciated, meaning equipment minus the accumulated depreciation adds up to zero, it's been fully depreciated. So we're going to take those two off the books. So I'm going to take the accumulated depreciation. Let's do that first, because it's going to be a debit, so it has 110,000 credits. We need to take it off the books with a debit, so we'll do the opposite thing to it, a debit. Now note, if you don't have the trial balance in front of you, it's often easy to forget about the accumulated depreciation or get confused on which way it will go, but just note it's, of course, the opposite of the equipment account. So I'm going to copy this, we're going to put that in B24, right click and paste 123. The amount's going to be for 110,000. Then we're going to have the credit, and that credit's going to go to equipment. We got to bring the equipment down to zero, so we're going to do the opposite thing to it, in this case, a credit. So we'll copy the equipment, right click and copy. We're going to put that in B25, right click and paste 123. We could indent that, go into the home tab, alignment, increase in denting, and that's going to be for a credit of 110,000. Now that accounts for everything that we have information on. It has the cash we got, it takes the equipment off the books as well as the accumulated depreciation. However, we're not in balance. The debit's add up to 110.5, credit's only add up to 110. We have an added 500 on the debit side, we need another 500 on the credit side. So to make us in balance, I call this the plug formula, would be negative sum of, and then we'll add up these cells. So it's going to be 500, of course, it would be this plus this minus this, but we want it to be a credit. So I put a negative in front, and that'll be 500. Now if we highlight the whole thing, it adds up to zero, meaning the debits minus the credits add up to zero. Now we just need to know what account to put this 500 to. And this is often a pretty confusing component when we're first learning this because it's a credit and it represents a gain or a loss, of course, because it's got to be an income statement account because it's almost like a sale, we pretty much sold it. We sold the scrap here. And if you think about it, we sold it for 500, and the cost of it was pretty much zero. It's this minus this, it's been fully depreciated, it's not on the books for anything anymore, we already expensed it all. So it costs pretty much zero, so that must be a gain then. And some people, it can be confusing because it's a credit, and we just need to remember that a credit is kind of good on the income statement. The income or revenue are credit balance accounts, whereas the expense accounts are debit balance accounts. So we actually kind of like credits on the on the income statement. So I'm going to call it gain loss on disposal. So this account then is going to be used, whether it's a gain or a loss, the way we have it here, we may have two accounts in some cases, one for the gain on disposal, one for a loss on disposal. This one's going to have a gain if it's a credit, a loss, if it's a debit. In this case it's a credit, it should increase net income, I'm going to copy this, right click and copy, put that in B26, right click and paste 1, 2, 3. Then we'll increase the indenting, go into the home tab, alignment, increase indenting, and then let's post this one. So in H23, we'll post the cash by saying equals, and point to that 500, bringing the 500,000 up by 500 to 500,500. Then the accumulated depreciation here is going to be posted here in H26, where we will say equals, and point to the 110 debit, bringing this balance down to zero. Then we'll go to the equipment account in H25, so we're posting this on the journal here to our worksheet in H25 equals, point into that 110 and enter, bringing that down to zero. Last one we're going to have the gain or loss on disposal, that 500, we're going to put that down in H33 by saying equals, point into that 500, that should bring the zero balance up by 500 to 500. That puts us back in balance here. We do have an effect on net income. It went from 66,000 credits winning, that means income, it's net income, to 66,500, at least it would if the formulas were working here. So here's the 66,000, it's going up by 500 to the 66,500, so that's the revenue minus the expenses. This is a form of revenue, so it's increasing the net income.