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James Company purchased four identical machines on January 10, 2019, paying $6,090 for each. The useful...

James Company purchased four identical machines on January 10, 2019, paying $6,090 for each. The useful life of each machine is expected to be six years, with a salvage value of $690 each. The company uses the straight-line method of depreciation. Selected transactions involving the machines follow. The accounts for recording these transactions are also given.

DATE TRANSACTIONS FOR 2019
Jan. 10 Paid $6,090, in cash, for each of four machines.
Dec. 31 Recorded depreciation for the year on the four machines.
DATE TRANSACTIONS FOR 2020
Apr. 3 Machine 1 was stolen; no insurance was carried.
Dec. 31 Recorded depreciation for the year for the three remaining machines.
DATE TRANSACTIONS FOR 2021
Sept. 18 Sold machine 2 for $4,000 cash.
Dec. 31 Recorded depreciation for the year on the two remaining machines.
DATE TRANSACTIONS FOR 2022
June 4

Machine 3 was traded in for a similar machine (no. 5) with a $7,602 list price and fair market value. A trade-in allowance of $3,295 was received. The balance was paid in cash. The new machine has an estimated life of six years and salvage value of $690.
Aug. 29

Machine 4 was traded in for a similar machine (no. 6) with an $9,330 list price and fair market value. A trade-in allowance of $2,210 was received. The balance was paid in cash. The new machine has an estimated life of six years, with salvage value of $690.
Dec. 31 Record depreciation on the two new machines.


Required:
Prepare the journal entries for the transactions.

Analyze:
What is the balance of the Accumulated Depreciation account on December 31, 2022?

(Note: The presentation in the text related to the exchanges of assets has been superseded by FAS 153. Under FAS 153, gains and losses on the exchange of assets that have commercial substance are recognized in full. The deferral of gains (by reducing the basis in the new asset) only pertains to assets that lack commercial substance.)

Please complete 13 total journal entries and provide the total accumulated depreciation for thumbs up.

Thank you!

business   accounting   
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Answer #1

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