On January 1, 2017. Worldwide Manufacturing purchased a machine for $810,000 that it expected to have a useful life of four years
On January 1, 2017. Worldwide Manufacturing purchased a machine for $810,000 that it expected to have a useful life of four years. The company estimated that the residual value of the machine was $50,000. Worldwide Manufacturing used the machine for two years and sold on January 1, 2010. for $350.000. As of December 31, 2018, the mounted depreciation on the machine was $380,000.
Read the requirements
1. Calculate the gain or loss on the sale of the machinery.
2. Record the sale of the machine on January 1, 2019.
Homework Answers
1. Worldwide Manufacturing will record loss of $80,000 on the sale of machinery .
| Calculation of Loss on sale of machinery | |
| Particulars | Amount |
| Value of machinery as on January 1, 2019 | $ 4,30,000 |
| (-) Sale proceeds | $ 3,50,000 |
| Loss on Sale | $ 80,000 |
Note:
| Calculation of value of machinery as on January 1, 2019 | |
| Particulars | Amount |
| Value of machinery as on January 1, 2017 | $ 8,10,000 |
| (-) Accumulated Depriciation | $ 3,80,000 |
| Value of machinery as on January 1, 2019 | $ 4,30,000 |
2. Journal Entry
| Journal Entry | |||
| Date | Particulars | Debit (in $) | credit (in $) |
| 01.01.19 | Bank | 350000 | |
| Profit & Loss | 80000 | ||
| Accumulated Depriciation | 380000 | ||
| Machinery | 810000 |
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