Question

During the current year, Martinez Company disposed of two different assets. On January 1, prior to their disposal, the accounts reflected the following: al Asset Machine A Machine B Original Cost $85,700 29,500 Residual Value $10,400 3,900 Estimated Life 15 years 8 years Accumulated Depreciation (straight-line) $65, 260 (13 years) 19,200 (6 years) The machines were disposed of in the following ways: a. Machine A: Sold on January 2 for $29,500 cash. b. Machine B: On January 2, this machine was sold to a salvage company at zero proceeds (and zero cost of removal). 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.)

Answer 1

Journal Entries Post Account Title and Explaination Credit Date Debit Ref. Cash 29,500.00 а Accumulated Depreciation - Machine A 65,260.00 Machine A $ 85,700.00 Gain on Disposal 9,060.00 |(To record Sale of Machine A) Accumulated Depreciation - Machine B Loss on Disposal b $ 19,200.00 10,300.00 Machine B 29,500.00 (To record Disposal of Machine B)