 And we're going to say now we got no cash, it's five-year useful life property, no salvage value it is disposed of in the middle of year five. So what we're saying now here is we have this depreciation, accumulated depreciation, but it's not fully depreciated. And if that's the case, then we got to make sure that we depreciate it up to the point of sale because depreciation is an adjusting entry process and we may only do it every month or every year. And therefore, if it's not the end of the month or the end of the year, it may not be fully depreciated at the point in time that we sell it. And so we have to record whatever depreciation has passed to the point in time that we sell and then we can go through our sales process. So in this case, we're going to say that the cost, we're going to calculate the depreciation and we're going to figure out that component that hasn't been depreciated yet. So it's going to be straight line method, we're just going to take the cost 110,000 useful life said it was five years. If we divide that out, we're going to say 110 divided by five. So it should be 22 a year. And what we're saying, it was the middle of year four. So if I look here, we've got 88,000. So if I took 88,000 divided by 22,000, it's been depreciated over four years. And we're selling it in the middle of the fifth year. So it should have half another year to depreciate. So we need to add half a year of depreciation before we dispose of it. So we're just going to divide this by two and then say this equals the 22 divided by two. And that should give us our 11,000. So once again, the straight line method, we just took the cost divided by the useful life gives us the depreciation per year. We had one half a year not yet depreciated divided by two. That gives us our 11,000 that we need to record as depreciation before we then dispose of the equipment or record the disposing. So it's going to be our normal adjusting journal entry to do that. And that's going to be accumulated depreciation going up and depreciation expense. And you kind of just want to have this one memorized. So depreciation expense, it's an adjusting journal entry, depreciation expense on the income statement and accumulated depreciation on the balance sheet. Expenses only go up typically. So we're going to increase it by doing the same thing to another debit. So I'm going to copy the depreciation expense here, we'll put that up top, paste it 123 for our, I'm just going to say equals this 11,000 we calculated. Then I'm going to put a credit for, I'm going to use a negative of that number gives us a credit of 11,000. And that's going to go to accumulated depreciation. So we'll copy accumulated depreciation, right click, copy, put that in the beat 43 right click and paste 123. And that'll give us our information there for our first journal entry. So let's record this first and then keep moving forward. So we'll record the depreciation. So I'm going to go down here in H 51 and say equals and point to that 11,000 bringing the depreciation up to 11,000 and bringing our net income down by 11,000. The next piece will go to accumulated depreciation in H 45. So we're going to say in H 45 this equals and point to that 11,000 bringing the balance up from 88,000 by 11,000 to 99,000. So now we can see that there was an effect on net income and we have 99,000 in accumulated depreciation. The book value then is 110,000 minus 99,000 or 11,000, which is a half of another year of depreciation left. So we've got 11,000 left, that's the book value. Now and this one we're saying we didn't get any cash for it, we just disposed of it before it was fully depreciated and we didn't get any scrap for it or anything. So I'm going to make another journal entry is cash affected, we're going to say no and then just go through our normal process to get this equipment off the books, meaning we have equipment on the books, we need it to go down, so I'm going to do the opposite thing to it. So I'm going to copy that, it's a debit, we're going to credit it. I'm going to skip a line for a new journal entry and skip another line to put it on the bottom, right click and paste 123, that's going to be a credit. I'm going to put a negative of 110,000. You can indent it, go into the home tab, alignment, increase in denting. Then the accumulated depreciation needs to go off the books too. If we have our worksheet we can see here, okay it's 99,000 that we need to make go to zero. If you're working a book problem and you don't have the sheet here, the excel, the trial balance, then it would have to tell you that it's 88,000 and then you'd have to add the 11,000 for our journal entry to note that it's now at 99,000 in some way. You might use T-accounts to do that, but that's what we'd have to track. That's why it's best, it's nicest to actually see a trial balance. If you don't have one in front of you, it's good just to use another trial balance just to note that it is a credit balance account and put it into context. So even if you don't have the same numbers, it could be useful to look at. So then I'm going to copy this accumulated depreciation, put that on top, B45, right click and paste, 1, 2, 3, the amount will be 99,000 and then we've got a difference of course, we're out of balance here. So we're going to need a debit in this case of, what is that, that's our 11,000 of course. And if we highlight it instead of trying to, we have the 11,000 here and then we're going to do that with our negative plug form. Now we know that it's going to be a debit because the debits are losing here. So we need a debit. So we'll put it in C47, I'm going to put a negative SUM using our plug formula, double click the sum function and highlight from the 99 down to the 110. Now this is going to be a debit and it's also often confusing once again to say, well, is that a gain or loss? And if you look on it, it's a debit and it's on the income statement. And so that means it's going to be kind of like acting as an expense, which will bring down net income like a loss will. The other way we can kind of see it's a loss is that of course, if we if we looked at the equipment, it still had value, meaning it still has an depreciated amount of 11,000, the book value is 110 minus the 99, if it had a book value of 11,000, and we didn't get any money for it, and we got zero cash, then that would mean it's going to be a loss. So we're going to go back over here, it's going to be in that gain loss account. In this case, it's going to be a loss, a debit, going to copy that, going to put that over here and be 47 right click and paste 123. Now note this is a little out of order. I think this is the easiest way to construct this journal entry, and that's why I'm going to leave it this way. But if it's getting picky in terms of the formatting, you might want to then change and put the debits on top. If you keep it in this format, I think it might be easier to go back and look and say, what did I do? Why did I do it? How did I construct this journal entry? So those are the pros and cons between putting the debits on top or leaving it in whatever structure you think will help you to one, construct it to go back and look at it and see what you did. Okay, so then we're going to say accumulated depreciation and post-app. That's going to be over here in H45. There's something in it already, so I'm going to double click on it. Go to the end of it, plus, and then point it to that 99, bringing the balance down to zero. Then we've got the equipment account here. That's going to go to the equipment account on the trial balance here in cell H44. So within cell H44, we will say equals and point to that 110,000 to credit, bringing the balance from 110 down by 110 to zero. Then we're going to go to the disposal, so the gain or loss on disposal, in this case loss on the income statement here. So we're here, we're going to be in H52. We will say equals and point to that 11,000 and enter. So you can see what that did is it's bringing net income down. It went down by 22 overall, 11,000 for the depreciation and another 11,000 for the loss that we recorded when we recorded this disposal. And that means that the income minus the expenses and then minus this loss here, that's where we're getting the 66. So what this is income, net income, the credits beating the debits, minus the 22,000 of depreciation and loss, bringing us to 55,000. Okay, we got one.