Question

Saved Help During 2017, Ly Company disposed of two different assets. On January 1, 2017, prior to disposal of the assets, the accounts reflected the following: Asset Machine A Machine B Original Residual Cost Value $24,000 $2,000 59, 2003, 200 Estimated Life 5 years 14 years Accumulated Depreciation (straight-line) $17.600 (4 years) 48,000 (12 years) The machines were disposed of in the following ways: a. Machine A: This machine was sold on January 1, 2017 for $5,750 cash. b. Machine B: On January 1, 2017, this machine suffered irreparable damage from an accident and was removed immediately by a salvage company at no cost. Required: 1. Prepare the journal entries related to the disposal of each machine at the beginning of 2017 Transaction "a" relates to the recording of the 2017 depreciation and transaction "b" relates to the recording of the disposal of the machine. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Machine A - Jan 1, 2017: View transaction list Record the depreciation expense in 2017. 2 Record the entry for disposal of Machine A.

Answer 1

S.No. Date General Journal Debit Credit 1 01.01.2017 No journal entry required 2 01.01.2017 Cash Accumulated Depreciation- Machine A Loss on Sale of Machine A Machine A ( Sale of Machine - A recorded) $ $ $ 5,750 17,600 650 $ 24,000 2) S.No. Date General Journal Debit Credit No journal entry required 2 48,000 11,200 $ 01.01.2017 | Accumulated Depreciation- Machine B Loss on disposal of Machine A Machine B (Disposal of Machine - B recorded) $ 59,200

Notes: In both the assets case, Machines are sold or diposed in the beginnign of the year, hence no depreciation provided. Hence no journal entry required. Loss on sale of Machine A: Cost of machine A Less : Accumulated Depreciation Book Value of Machine A Less: sale vale of machine A Loss on sale of machine A $ $ $ $ $ 24,000 (17,600) 6,400 (5,750) 650 Loss on disposal of Machine B Cost of machine B Less: Accumulated Depreciation Loss on disposal of Machine B $ $ $ 59,200 (48,000) 11,200