Question

Ayayai Tool Corp. records depreciation annually at the end of the year. Its policy is to take a full year's depreciation on all assets that are used throughout the year and depreciation for half a year on machines that are acquired or disposed of during the year. The depreciation rate for the machinery is 10%, applied on a straight-line basis, with no estimated scrap or residual valve The balance of the Machinery account at the beginning of 2020 was $172,300; the accumulated Depreciation on Machinery account had a balance of $72.900. The machinery accounts were affected by the following transactions that occurred in 20201 Jan. 15 Machine no. 38, which cost $10,000 when it was acquired on June 3, 2013, was retired and sold as scrap metal for $600. Feb. 27 Machine no B1 was purchased. The fair value of this machine was $19,500. It replaced two machines, nos 12 and 22, which were traded in on the new machine. Machine no. 12 was acquired on February 4, 2008, a cost of $5,500 and was il carried in the accounts, although it was fully deprecated and not in use. Machine no. 27 was acquired on June 11, 2013, at a cost of $1,200. In addition to these two used machines, Ayayal paid $5,000 in cash. Apr. 7 Machine no. 54 was equipped with electric controls at a cost of $940. This machine, originally equipped with simple and control was purchased on December 11, 2016, for $1,000. The new electric controls can be attached to any one of several machines in the shop. 12 Machine no. 24 was repared at a cost of $1,520 after a fire caused by a short circuit in the wiring burned out the motor and damaged certain essential parts July 22 Machines 25, 26, and 41 were sold for $3,700 cash. The purchase dates and cost of these machines were as follows: No. 25 No. 26 No. 41 May 8, 2012 May 8, 2012 June 1, 2014 $4,000 3.200 2,800 Record each transaction in general journal form. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If ne entry is required, select "We Entry for the account titles and enter for the amounts) Account Titles and Explanation Debit Credit Date January 15 April 7

Answer 1

In the books of Ayayai Tools Corp. :

Date	Account Titles and Explanations	Debit	Credit
		$	$
Jan 15	Depreciation Expense	500
	Accumulated Depreciation : Machinery		500
	Depreciation expense of machinery retired
Jan 15	Cash	600
	Accumulated Depreciation: Machinery	7,000
	Loss on Retirement of Machinery	2,400
	Machines		10,000
	To record retirement of machinery
Feb 27	Depreciation Expense	410
	Accumulated Depreciation : Machinery		410
	To record depreciation on Machine 27
Feb 27	Machinery	19,500
	Accumulated Depreciation : Machinery	11,240
	Gain on Exchange of Machinery		12,040
	Machinery		13,700
	Cash		5,000
	To record exchange of machinery
April 7	Machinery	940
	Cash		940
	To record purchase of electric controls
Machine 12	Repairs Expense	1,520
	Cash		1,520
July 22	Depreciation Expense	500
	Accumulated Depreciation : Machinery		500
	To record depreciation on assets sold
July 22	Cash	3,700
	Accumulated Depreciation: Machinery	7,440
	Gain on Sale of Machinery		1,140
	Machinery		10,000
	To record sale of machinery