Question

On December 31, 2020, Vaughn Inc. has a machine with a book value of $1,015,200. The original cost and related accumulated depreciation at this date are as follows. Machine $1,404,000 Less: Accumulated depreciation 388,800 Book value $1,015.200 Depreciation is computed at $64,800 per year on a straight-line basis. Presented below is a set of independent situations. For each independent situation, indicate the journal entry to be made to record the transaction. Make sure that depreciation entries are made to update the book value of the machine prior to its disposal. A fire completely destroys the machine on August 31, 2021. An insurance settlement of $464,400 was received for this casualty. Assume the settlement was received immediately. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Credit Date Account Titles and Explanation Debit August 31, 2021 (To record current depreciation.) August 31, 2021 (To record loss of the machine.)

Answer 1

Part 1
Date	Account and explanation	Debit	Credit
Aug 31,2021	Depreciation expenses-Machine	$43,200
	Accumulated Depreciation-Machine		$43,200
Aug 31,2021	Accumulated Depreciation-Machine	$4,32,000
	Cash	$4,64,400
	Loss on fire	$5,07,600
	Machine		$14,04,000
Part 2
Date	Account and explanation	Debit	Credit
April 1,2021	Depreciation expenses-Machine	$16,200
	Accumulated Depreciation-Machine		$16,200
Aug 31,2021	Accumulated Depreciation-Machine	$4,05,000
	Cash	$11,23,200
	Machine		$14,04,000
	Gain on disposal		$1,24,200
Part 3
Date	Account and explanation	Debit	Credit
July 31,2021	Depreciation expenses-Machine	$37,800
	Accumulated Depreciation-Machine		$37,800
Aug 31,2021	Accumulated Depreciation-Machine	$4,26,600
	Loss on donation	$9,77,400
	Machine		$14,04,000