During the current year, Martinez Company disposed of two different assets. On January 1, prior to their disposal, the accounts reflected the following:
Asset | Original Cost | Residual Value | Estimated Life | Accumulated Depreciation (straight-line) | |||||||
Machine A | $ | 83,200 | $ | 8,400 | 15 | years | $ | 64,827 | (13 years) | ||
Machine B | 27,000 | 3,400 | 8 | years | 17,700 | (6 years) | |||||
The machines were disposed of in the following ways:
Required:
1. & 2. Prepare the journal entries related to the disposal of Machine A and B on the January 2 of the current year. TIP: When no cash is received on disposal, the loss on disposal will equal the book value of the asset at the time of disposal. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
a) Journal entry
Date | account and explanation | Debit | Credit |
Jan 2 | Cash | 27000 | |
Accumulated depreciation-Machine A | 64827 | ||
Gain on disposal of Machine A | 8627 | ||
Machine A | 83200 | ||
(To record sale of machine A) | |||
b) Journal entry
Date | account and explanation | Debit | Credit |
Jan 2 | Accumulated depreciation-Machine B | 17700 | |
Loss on disposal of Machine B | 9300 | ||
Machine B | 27000 | ||
(To record sale of machine B) | |||
During the current year, Martinez Company disposed of two different assets. On January 1, prior to...
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