Question

Diaz Company owns a machine that cost $126,100 and has accumulated depreciation of $90,300. Prepare the entry to record the disposal of the machine on January 1 in each separate situation: 1. The machine needed extensive repairs and was not worth repairing. Diaz disposed of the machine, receiving nothing in return. 2. Dlaz sold the machine for $16,200 cash. 3. Diaz sold the machine for $35,800cash. 4. Diaz sold the machine for $41,400cash. Journal entry worksheet Record the disposal of the machine receiving nothing in return. thote: Enter debity belese credits

Answer 1

To record the disposal of the machine, the journal entry will debit the accumulated depreciation account and credit the machine account. The specific accounts and amounts will vary depending on the situation. In situation 1, where the machine is disposed of without receiving anything in return, only the accumulated depreciation account will be debited. In situations 2, 3, and 4, where the machine is sold for cash, both the accumulated depreciation and cash accounts will be debited, and the machine account will be credited.

Step-by-step explanation:

To record the disposal of the machine in situation 1, we will debit the accumulated depreciation account and credit the machine account.

Journal Entry:

Accumulated Depreciation - $90,300

Machine - $126,100

In situation 2, where Diaz sold the machine for cash, we will debit the accumulated depreciation account, debit the cash account for the amount received, and credit the machine account for its original cost.

Journal Entry:

Accumulated Depreciation - $90,300

Cash - $16,200

Machine - $126,100

In situation 3 and 4, we will follow a similar approach as situation 2, but we will credit the machine account for its original cost and any gain on the sale.

Journal Entry for situation 3:

Accumulated Depreciation - $90,300

Cash - $35,800

Machine - $126,100

Journal Entry for situation 4:

Accumulated Depreciation - $90,300

Cash - $41,400

Machine - $126,100