Kathy Company purchased and installed a machine on January 1, 2006 at a total co
ID: 2380258 • Letter: K
Question
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, 2010.
1. Prepare the general journal entry to record depreciation for 2010 from January 1 to the date of disposal
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.
Explanation / Answer
12/31/06
DR Depreciation Expense $14,400
CR Accumulated Depreciation $14,400
12/31/07
DR Depreciation Expense $14,400
CR Accumulated Depreciation $14,400
12/31/08
DR Depreciation Expense $14,400
CR Accumulated Depreciation $14,400
12/31/09
DR Depreciation Expense $14,400
CR Accumulated Depreciation $14,400
7/1/10
DR Depreciation Expense $7,200
CR Accumulated Depreciation $7,200
2.A. 7/1/10
DR Cash $22,000
DR Accumulated Depreciation $64,800
CR Gain on Sale of Machine $14,800
CR Machine $72,000
2.B. 7/1/10
DR Cash $15,000
DR Accumulated Depreciation $64,800
CR Gain on Sale of Machine $7800
CR Machine $72,000
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