Kathy Company........ Kathy Company purchased and installed a machine on January

Question

Kathy Company........ Kathy Company purchased and installed a machine on January 1, 2006 at a total cost of $72,000. Straight-line depreciation was calculated based on the assumption of a five-year life, and no salvage value. The machine was disposed of on July 1, 2009. 1. Prepare the general journal entry to update depreciation to July 1, 2009. 2. Prepare the general journal entry to record the disposal of the machine under each of these three independent situations: a. The machine was sold for $22,000 cash. b. The machine was sold for $15,000 cash. c. The machine was totally destroyed in a fire and the insurance company settled the claim for $18,000 cash. Kevin Company........... prepare the journal entries to record all of the transactions listed below. Kevin Company hjad the following transactions involving plant assets during 2008 and 2009. Unless otherwise indicated, all transactions were for cash. Jan 2:

Explanation / Answer

2008
Jan. 1 Paid $22,015 cash plus $1,785 in sales tax for a new delivery truck estimated to have a five year life and a $2,300 salvage value. Delivery truck costs are recorded in the Trucks account.
Dr Delivery Truck 23,800
Cr Cash 23,800

Dec. 31 Recorded annual straight-line depreciation on the truck.
(23,800 - 2,300) / 5 = 4,300 yearly depreciation
Dr Depreciation Expense--Delivery Truck 4,300
Cr Accumulated Depreciation--Delivery Truck 4,300

2009
Dec. 31 Due to new information obtained earlier in the year, the truck

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