Homework Answers
Annual depreciation = (Cost of machine - Salvage value)/Useful life
= (300,000 - 20,000)/10
= $28,000
Accumulated depreciation for 5 year = Annual depreciation x 5
= 28,000 x 5
= $140,000
Book value of machine on Jan. 1, 2018 = Cost price - Accumulated depreciation
= 300,000 - 140,000
= $160,000
Sale price of machine = $140,000
Loss on sale of machine = Book value of machine on Jan. 1, 2018 - Sale price of machine
= 160,000 - 140,000
= $20,000
Journal
|
Date |
Account Title and Explanation |
Debit |
Credit |
| Jan. 1, 2018 | Cash | 140,000 | |
| Accumulated depreciation - Machinery | 140,000 | ||
| Loss on sale of machinery | 20,000 | ||
| Machinery | 300,000 |
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