Greenscape Landscaping purchased a tractor at a cost of $38,000 and sold it three years later for $19,300. Greenscape recorded depreciation using the straight-line method, a five-year service life, and a $2,500 residual value. Tractors are included in the Equipment account.Exercise 7-17 (Algo) Part 1Required:1. Record the sale. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

To record the sale of the tractor, we first need to calculate the depreciation expense for the three years that the tractor was in use.

Step 1: Calculate the Depreciation Expense The straight-line method of depreciation spreads the cost of the asset evenly over its service life. The formula for straight-line depreciation is:

Depreciation Expense = (Cost of Asset - Residual Value) / Useful Life

In this case, the cost of the asset is $38,000, the residual value is$2,500, and the useful life is 5 years.

Depreciation Expense = ($38,000 -$2,500) / 5 = $7,100 per year

Since the tractor was in use for 3 years, the total depreciation is $7,100 * 3 =$21,300.

Step 2: Record the Depreciation The journal entry to record the depreciation for the three years would be:

Debit Depreciation Expense: $21,300 Credit Accumulated Depreciation:$21,300

Step 3: Record the Sale When the tractor is sold, the book value of the tractor is the original cost minus the accumulated depreciation. In this case, the book value is $38,000 -$21,300 = $16,700.

The tractor was sold for $19,300, which is more than the book value. This means there is a gain on the sale of the tractor. The gain is the selling price minus the book value, or$19,300 - $16,700 =$2,600.

The journal entry to record the sale would be:

Debit Cash: $19,300 Debit Accumulated Depreciation:$21,300 Credit Equipment (tractor): $38,000 Credit Gain on Sale of Equipment:$2,600

This records the cash received from the sale, removes the tractor from the Equipment account, removes the accumulated depreciation, and records the gain on the sale.