98.2k views
2 votes
During the current year, Martinez Company disposed of two different assets. On January 1, prior to their disposal, the accounts reflected the following: Asset Original Cost Residual Value Estimated Life Accumulated Depreciation (straight-line) Machine A $ 80,700 $ 6,700 15 years $ 64,133 (13 years) Machine B 24,500 2,900 8 years 16,200 (6 years) The machines were disposed of in the following ways: Machine A: Sold on January 2 for $24,500 cash. Machine B: On January 2, this machine was sold to a salvage company at zero proceeds (and zero cost of removal). Required: 1. & 2.

Prepare the journal entries related to the disposal of Machine A and B on January 2 of the current year. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.).

1 Answer

5 votes

Answer:

Requirement 1

Machine A

Cash $24,500 (debit)

Accumulated Depreciation $ 64,133 (debit)

Machine $80,700 (credit)

Profit on Sale of Machine $7,933 (credit)

Requirement 2

Machine B

Loss on Sale of Machine $9,300 (debit)

Accumulated Depreciation $ 16,200 (debit)

Machine $25,500 (credit)

Step-by-step explanation:

For every sale of an Asset the following must happen :

  1. De-recognise the Asset Cost
  2. De-recognise the Accumulated Depreciation to date
  3. Recognise the Proceed (if any)
  4. Recognise the Profit or Loss on Sale of Asset in Income Statement
User Iqmaker
by
8.8k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.