Question

On January 2, Bering Co. disposes of a machine costing $40,400 with accumulated depreciation of $21,763. Prepare the entries to record the disposal under each separate situation.The machine is sold for $15,631 cash.The machine is traded in for a new machine having a $56,900 cash price. A $19,238 trade-in allowance is received, and the balance is paid in cash. Assume the asset exchange has commercial substance.The machine is traded in for a new machine having a $56,900 cash price. A $14,429 trade-in allowance is received, and the balance is paid in cash. Assume the asset exchange has commercial substance.

Answer 1

Step-by-step explanation:

1. Cash Dr. $15,631

Accumulated depreciation Dr.$21,763

Loss on disposal(40,400-21,763-15,631) Dr.$3,006

Machine Cr.$40,400

2. Machine-New (56,900-19,238) Dr.$37,662

Cash Dr.$19,238

Accumulated Depreciation Dr.$21,763

Machine Old Cr.$40,400

Cash (56,900-19,238) Cr.$37,662

Gain on disposal (40,400-21,763-19238) Cr.$601

3. New Machine (56,900-14,429) Dr.$42,471

Cash Dr.$14,429

Accumulated Depreciation Dr.$21,763

Loss on disposal(40,400-21,763-14,429) Dr.$4,208

Machine Old Cr.$40,400

Cash Cr.$42,471