What is the double entry for recording the sale proceeds from a non-current asset disposal?

Recording the sale proceeds from a non-current asset disposal involves a transaction where cash or bank is received in exchange for the asset being sold. When the asset is disposed of, the cash received is recognized as an asset increase. Therefore, the appropriate journal entry is to debit the Bank (or Cash) account, which represents the actual cash inflow or increase in funds, and to credit the Disposal account, which records the removal of the asset from the books.

In this context, the Double Entry System is followed, where every transaction has a dual effect on the financial statements. By debiting the Bank or Cash account, you are acknowledging the increase in liquidity due to the sale proceeds. Crediting the Disposal account reflects the reduction of the asset previously recognized on the balance sheet and acknowledges that it has been disposed of as part of the asset's exit from the organization’s books.

This structure ensures accurate reflection of both asset disposal and cash inflow, thereby maintaining the accounting equation's integrity.