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Exercise 8-17 Partial-year depreciation; disposal of plant asset LO P2 Rayya Co. purchases and installs a machine on January
Journal entry worksheet 2 3 Record the depreciation expense as of July 1, 2021. Note: Enter debits before credits. General Jo
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Journal entry worksheet 12 Record the insurance settlement received of $60,480 due to the machines total destruction in a fi
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Answer #1

a. Record depreciation

Depreciation for each year = $176400 / 7 = $25,200

Since the machinery is used only for 6 months till June 2021. The depreciation to be charged should be for 6 months.

  Depreciation for 2021 = $25200 * (6/12) = $12,600

Accumulated Depreciation = $25200 * 4.5 years = $113,400

Gain on sale of machinery = $75600 - ( $176400 - $113400) = $12,600

Loss due to fire = $60480 - ( $176400 - $113400) = $2520

No. Date Accounts Debit Credit
a. July 01, 2021 Depreciation expenses 12,600
Machinery 12,600
(Being depreciation expense for half year)
b. July 01, 2021 Cash 75600
Accumulated Depreciation 113400
Gain on sale of Machinery 12600
Machinery 176400
(Being sale of machinery)
c. July 01, 2021 Cash 60480
Accumulated Depreciation 113400
Loss due to fire 2520
Machinery 176400
(Being loss due to fire)

  

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