Question

Diaz Company owns a milling machine that cost $126,500 and has accumulated depreciation of $92,700. Prepare the entry to record the disposal of the milling machine on January 3 under each of the following independent situations. The machine needed extensive repairs, and it was not worth repairing. Diaz disposed of the machine, receiving nothing in return. Diaz sold the machine for $15,900 cash. Diaz sold the machine for $33,800 cash. Diaz sold the machine for $41,200 cash.

Answer 1

A. Jan 03

Dr Accumulated depreciation—Milling machine $92,700

Dr Loss on disposal of milling machine $33,800

Cr Milling machine $126,500

B .Jan 03

Dr Cash $15,900

Dr Accumulated depreciation—Milling machine $92,700

Dr Loss on sale of milling machine $17,900

Cr Milling machine $126,500

C. Jan 03

Dr Cash $33,800

Dr Accumulated depreciation—Milling machine $92,700

Cr Milling machine $126,500

Step-by-step explanation:

Preparation of journal entries

A. Jan 03

Dr Accumulated depreciation—Milling machine $92,700

Dr Loss on disposal of milling machine $33,800

($126,500-$92,700)

Cr Milling machine $126,500

B .Jan 03

Dr Cash $15,900

Dr Accumulated depreciation—Milling machine $92,700

Dr Loss on sale of milling machine $17,900

[126,500-($15,900+$92,700)

Cr Milling machine $126,500

C. Jan 03

Dr Cash $33,800

Dr Accumulated depreciation—Milling machine $92,700

Cr Milling machine $126,500