Question

on january 2, dixie, incorporated, pays a salvage company $1,000 to haul away a machine costing $28,000 with accumulated depreciation of $28,000plete the necessary journal entry by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.

Answer 1

The journal entry for Dixie, Incorporated to record the disposal of a fully depreciated machine includes debiting Accumulated Depreciation for $28,000, debiting Loss on Disposal for $1,000, crediting Equipment/Machine for $28,000, and crediting Cash for $1,000.

Step-by-step explanation:

The student's question is related to creating an accounting journal entry for the disposal of an asset, specifically a machine, in the context of a company, Dixie, Incorporated. When disposing of a machine with full accumulated depreciation, which is equal to the machine's cost, and paying for its removal, the entry will include removing the asset and the accumulated depreciation from the books, recognizing any loss on disposal, and recording the cash paid out.

To make the journal entry:

1. Debit the Accumulated Depreciation account for $28,000 to remove the depreciation associated with the machine.
2. Debit the Loss on Disposal account for $1,000, which is the cost of removal.
3. Credit the Equipment/Machine account for $28,000 to remove the machine from the books.
4. Credit the Cash account for $1,000 to record the outflow of cash to the salvage company.

The completed journal entry reflects the disposal of the fully depreciated machine and the associated cost of removing it.