On January 1, 2017 National Manufacturing purchased a machine for $1,020,000 that is expected to have...

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On January 1, 2017 National Manufacturing purchased a machine for $1,020,000 that is expected to have a use of six years. The

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Answer 1

Answer #1

National Manufacturing will record loss of $380000 on the sale of Machinery.

Workings:

Purchase price of Machine = $1020000

Sale price of Machine = $320000

Accumulated Depreciation = $320000

Book Value of Machinery as on date of sale = Purchase price - Accumulated Depreciation = $1020000 - $320000 = $700000

Loss on sale of Machinery = $700000 - $320000 = $380000

Journal entries:

Cash Account .... Debit $320000

Accumulated Depreciation Account ... Debit $320000

Loss on sale of Machinery Account .... Debit $380000

Machinery Account ..... Credit $1020000

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Answer 2

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