Question

I need help interpreting the following word problem. It is because I need to make the correct adjusting journal entry in a general journal.

On 12/03/2017, a mixer with a cost of $2,000, accumulated depreciation $1,200, was destroyed by a forklift. As of 12/23/17, insurance company has agreed to pay $700 in January, 2018, for accidental destruction.

Answer 1

Mixer Cost less: Accumulated Depreciation Book Value less: Insurance Claim agreed Loss on destruction of mixer $ $ $ $ $ 2,000 1,200 800 700 100 Loss on destruction of mixer will be recorded as expense, Insuarance claim agreed by insurance company will be received in January therefore, Insurance company will be recorded as Asset - (Receivables) Credit Adjustment Journal Entry would be : Date Accounts 12/23/17 Insurance Company Accumulated Depreciation Loss on Destruction of mixer Mixer (Equipment) (To record adjustment entry) $ $ $ Debit 700 1,200 100 $ 2,000

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