Below you will see three scenarios for disposal of assets. Prepare the journal e

Question

Below you will see three scenarios for disposal of assets. Prepare the journal entry for each. On June 1, 2016 Axle Corporation sold a truck for $10,000 cash. The truck originally cost $45,000 and the accumulated depreciation as of May 31, 2016 was 37,600. DATE ACCOUNT DEBIT CREDIT On September 1, 2016 Smith Conveyor Corp sold a piece of factory machinery for $12,000. The machine originally cost $52,000 and had accumulated depreciation of $36,500 as of August 31, 2016. DATE ACCOUNT DEBIT CREDIT On October 1, 2016 Axle Corporation scraped of a piece of machinery for no proceeds. The machine originally cost $20,000 and had accumulated depreciation of $18,000 as of September 30, 2016. On November 1, 2016 Smith Conveyor Corp scrapped a piece of machinery for no proceeds. The machine originally cost $22,000 and was fully depreciated. Below you will see three scenarios for disposal of assets. Prepare the journal entry for each. On June 1, 2016 Axle Corporation sold a truck for $10,000 cash. The truck originally cost $45,000 and the accumulated depreciation as of May 31, 2016 was 37,600. DATE ACCOUNT DEBIT CREDIT On September 1, 2016 Smith Conveyor Corp sold a piece of factory machinery for $12,000. The machine originally cost $52,000 and had accumulated depreciation of $36,500 as of August 31, 2016. DATE ACCOUNT DEBIT CREDIT On October 1, 2016 Axle Corporation scraped of a piece of machinery for no proceeds. The machine originally cost $20,000 and had accumulated depreciation of $18,000 as of September 30, 2016. On November 1, 2016 Smith Conveyor Corp scrapped a piece of machinery for no proceeds. The machine originally cost $22,000 and was fully depreciated.

Explanation / Answer

scenario-1June 1, 2016

Accumulated depreciation a/c … $ 37,600

Cash account………………….$ 10000

To Truck a/c ……$ 45,000

to Profit on sale of truck ……….$ 2600

scenario-2

Accumulated depreciation a/c … $ 36,500

Cash account………………….$ 12,000

loss on sale of factory machinery ……….$ 3,500   

To factory machinery a/c ……$ 52,000

scenario-3 October 1, 2016

Accumulated depreciation a/c … $ 18,000

loss on sale of machinery ……….$ 2000

To machinery a/c ……$ 20,000

scenario-4  November 1, 2016

Accumulated depreciation a/c … $ 22,000

To machinery a/c ……$ 22,000

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