On January 2, 2015, Bering Co. disposes of a machine costing $40,000 with accumu

Question

On January 2, 2015, Bering Co. disposes of a machine costing $40,000 with accumulated depreciation of $21,548. Prepare the entries to record the disposal under each of the following separate assumptions. The machine is sold for $15,476 cash. The machine is traded in fora newer machine having a $56,500 cash price. A$19,047 trade-in allowance is received, and the balance is paid in cash. Assume the asset exchange lacks commercial substance. The machine is traded in fora newer machine having a $56,500 cash price. A$14,285 trade-in allowance is received, and the balance is paid in cash. Assume the asset exchange has commercial substance.

Explanation / Answer

Cost of Machine $40,000 Acculumulated Dep $21,548 B.V of Machine $18,452 1 Machine is sold for $15476 Cash A/s Dr 15476 Accumulated Dep A/c Dr 21548 Loss on sale of Machine $2,976 [15476-18452] To Asset A/c 40000 2 Machine A/c Dr 37453 [56500-19047] Accumulated Dep A/c Dr 21548 To Asset A/c 40000 To Profit on sale of asset $19,001 [37453-18452]

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