Question

Exercise 10-24 On December 31, 2017, Blossom Inc. has a machine with a book value of $1,109,200. The original cost and related accumulated depreciation at this date are as follows Machine Less: Accumulated depreciation Book value $1,534,000 424,800 $1,109,200 Depreciation is computed at $70,800 per year on a straight-line basis. Presented below is a set of independent situations. For each independent situation, indicate the journal entry to be made to record the transaction. Make sure that depreciation entries are made to update the book value of the machine prior to its disposal A fire completely destroys the machine on August 31, 2018. An insurance settlement of $507,400 was received for this casualty. Assume the settlement was received immediately. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) DateAccount Titles and Explanation Debit Credit August 31, 2018 (To record current deprecdiation.) August 31, 2018 To record loss of the machine.)

Answer 1

Aug 31,2018 Depreciation a/c dr. $47200 (70800*8/12)

To accumulated Dep a/c $47200

( Being current dep charged)

Aug 31,2018 Cash a/c dr $ 507400

Acc Dep a/c dr $ 472000 ( 47200+424800)

Loss on mach a/c dr $ 554600

To Machinery a/c $ 1534000

( Being record loss of machine )

April 1,2018 Depreciation a/c dr. $17700 (70800*3/12)

To accumulated Dep a/c $17700

( Being current dep charged)

April 1,2018 Cash a/c dr $ 1227200

Acc Dep a/c dr $ 442500 ( 17700+424800)

To Gain on mach a/c dr $ 135700

To Machinery a/c $ 1534000

( Being record gain of machine )

July 31,2018 Depreciation a/c dr. $41300 (70800*7/12)

To accumulated Dep a/c $41300

( Being current dep charged)

July 31,2018 Contribution Expense a/c dr $ 1298000

Acc Dep a/c dr $ 466100 ( 41300+424800)

To Gain on mach a/c dr $ 230100

To Machinery a/c $ 1534000

( Being record donation of machine )