Question

During the current year, Martinez Company disposed of two different assets. On January 1, prior to their disposal, the accounts reflected the following: Asset Machine A Machine B Original Cost $77,200 2 1,000 Residual Value $4,500 2,200 Accumulated Depreciation Estimated Life (straight-line) 15 years $63,007 (13 years) 8 years 14,100 (6 years) The machines were disposed of in the following ways: a. Machine A: Sold on January 2 for $21,000 cash. b. Machine B: On January 2, this machine was sold to a salvage company at zero proceeds (and zero cost of removal). Required: 1. & 2. Prepare the journal entries related to the disposal of Machine A and B on the January 2 of the current year. TIP: When no cash is received on disposal, the loss on disposal will equal the book value of the asset at the time of disposal. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Answer 1

Machine A	Cash	21000
	Acc. Dep.- Machine A	63007
	Gain on sale		6807	( balancing fig.)
	Machine A		77200
Machine B	Acc. Dep.- Machine B	14100
	Loss on sale	6900		( balancing fig.)
	Machine B		21000