Question

Diaz Company owns a milling machine that cost $125,900 and has accumulated depreciation of $91,300. Prepare the entry to record the disposal of the milling machine on January 3 under each of the following independent situations. 1. The machine needed extensive repairs, and it was not worth repairing Diaz disposed of the machine, receiving nothing in return. 2. Diaz sold the machine for $15,700 cash. 3. Diaz sold the machine for $34,600 cash. 4. Diaz sold the machine for $40,600 cash.

Answer 1

Diaz Company Journal Enteries Debit in $ Credit in $ Trans. Particulars Accumulated Depreciation Milling Mach. a/c Dr. Loss on disposal a/c To Milling Machine (Machine disposed for nothing) 1 91300 Dr. 34600 125900 Cash a/c 2. Dr. 15700 Accumulated Depreciation - Milling Mach. a/c Dr. Loss on disposal 91300 Dr. 18900 To Milling Machine 125900 (Machine disposed for loss) Cash a/c Dr. 34600 Accumulated Depreciation Milling Mach. a/c Dr. To Milling Machine (Machine disposed for Book Value) 91300 125900 Cash a/c Dr. 40600 Accumulated Depreciation - Milling Mach. a/c Dr. To Milling Machine 91300 125900 To Gain on sale 6000