Kenco purchased a new CNC lathe 6 years ago that had an installed cash cost of...
Kenco purchased a new CNC lathe 6 years ago that had an installed cash cost of $475,000. The lathe was being depreciated over 8 years using straight line deprecation without taking salvage value into consideration. On 12/31 of the sixth year, Kenco sold the lathe to a machine tool dealer for $85,000.
Required: Assume that lathe has been depreciated over six years and
that accumulated depreciation is up to date. Make the
required journal entry to record the transaction in
Kenco’saccounting system.
Homework Answers
Annual depreciation = (475000-0)/8 = $59375
Accumulated depreciation upto 6th year = 59375*6 = $356250
| Accounts | Debit | Credit |
| Cash | $85000 | |
| Accumulated depreciation - Lathe | $356250 | |
| Loss on sale of Lathe | $33750 | |
| Lathe | $475000 |
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