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Problem 9-15A Disposal of PPE LO1,2,3,6 CHECK FIGURES: 2, Dec. 31, 2017 $17,080; 3a. Loss-$3.990: 3b. Gain-$2.310: 3c. Gala-s 770 Vita Water purchased a used machine for $116,900 on January 2, 2017. It was repaired the next day at a $4,788 and installed on a new platform that cost $1,512. The company predicted that the machine would be used for six years and would then have a $20,720 residual value. Depreciation was to be charged on a straight-line basis to the nearest whole month. A full year's depreciation was recorded on December 31, 2017. On September 30, 2022, it was retired. Required 1. Prepare journal entries to record the purchase of the machine, the cost of repairing it, and the in- 2. Prepare entries to record depreciation on the machine on December 31 of its first gear and on 3. Prepare entries to record the retirement of the machine under each of the following unrelated stallation. Assume that cash was paicd. September 30 in the year of its disposal (round calculations to the nearest whole dollar). assumptions: a. It was sold for $21,000 b. It was sold for $27,300. c. It was destroged in a fire and the insurance company paid $25,760 in full settlement of the loss claim.

Answer 1

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	Purchase Cost	$116,900
	Add: Repair before installation	$    4,788
	Add: Installation Cost	$    1,512
	Total Machine Cost	$123,200
	Less: Residual value	$ -20,720
	Depreciable Value	$102,480
	Annual depreciation 102480/6	$ 17,080
Part : 1
Date	Account	Debit	Credit
Jan 2	Machine	$116,900
Jan 2	Cash		$116,900
	(to record cost of purchase)
Jan 2	Machine	$    4,788
Jan 2	Cash		$    4,788
	(to record cost of repair)
Jan 2	Machine	$    1,512
Jan 2	Cash		$    1,512
	(to record cost of installation)
Part : 2
Date	Account	Debit	Credit
Dec 31 2017	Depreciation Expense	$ 17,080
	Accumulated Depreciation		$ 17,080
	(to record full year depreciation)
Sep 30 2022	Depreciation Expense	$ 12,810
	Accumulated Depreciation		$ 12,810
	(to record 9 months depreciation-17080/12*9
Part : 3
	Book Value as on Sep 30 2022:
	Book Value as on 1st Jan 2017	$123,200
	Less: Depreciation till 31st Dec 2021 - 5 Year	$ 85,400
	Less: Half year Dep of 2022	$ 12,810
	Book Value as on Sep 30 2022:	$ 24,990
Date	Account	Debit	Credit
Sep 30 2022	Cash	$ 21,000
	Accumulated Depreciation (85400+12810)	$ 98,210
	Loss on Sale of Machine (24990-21000)	$    3,990
	Machine		$123,200
Sep 30 2022	Cash	$ 27,300
	Accumulated Depreciation (85400+12810)	$ 98,210
	Gain on Sale of Machine (27300-24990)		$    2,310
	Machine		$123,200
Sep 30 2022	Cash	$ 25,760
	Accumulated Depreciation (85400+12810)	$ 98,210
	Gain on Destruction of Machine (25760-24990)		$        770
	Machine		$123,200