Question

Exercise 8-16 Disposal of assets LO P2 Diaz Company owns a milling machine that cost $250,000 and has accumulated depreciation of $182,000. Prepare the entry to record the disposal of the milling machine on January 3 in 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 $35,000 cash. Diaz sold the machine for $68,000 cash. Diaz sold the machine for $80,000 cash.

Answer 1

Answer and Explanation:

The Journal entry is shown below:-

1. Cash Dr, $0

Accumulated Depreciation-Machinery Dr, $182,000

Loss on Disposal of Machinery Dr, $68,000

To Machinery $250,000

(Being Equipment disposed is recorded)

2. Cash Dr, $35,000

Accumulated Depreciation Dr, $182,000

Loss on sale of Machinery Dr, $33,000

To Equipment $250,000

(Being Equipment sold is recorded)

3. Cash Dr, $68,000

Accumulated Depreciation Dr, $182,000

To Equipment $250,000

(Being Equipment sold is recorded)

4. Cash Dr, $80,000

Accumulated Depreciation Dr, $182,000

To Gain on sale of equipment $12,000

To Equipment $250,000

(Being Equipment sold is recorded)