Just need solutions for the sections boxed in red which are wrong. Exercise 10-2

Question

Just need solutions for the sections boxed in red which are wrong.

Exercise 10-24 On December 31, 2014, Travis Tritt Inc. has a machine with a book value of $940,000. The original cost and related accumulated depreciation at this date are as follows Machine Less: Accumulated depreciation Book value $1,300,000 360,000 $940,000 Depreciation is computed at $60,000 per year on a straight-line basis. Presented below is a set of independent situations. For each independent situation, indicate the journal entry to be made to record the transaction. Make sure that depreciation entries are made to update the book value of the machine prior to its disposal.

Explanation / Answer

Situation Description Debit $ Credit $ A 1 Depreciation Expense 40000 Accumulated Depreciation—Machinery 40000 (Entry For Depriciation)(8/12 X $60,000) 2 Loss on Disposal of Machinery 470,000 Cash 430,000 Accumulated Depreciation—Machinery 400,000 Machine 1300000 (Being entry for Loss on machine Disposal =($1,300,000 – $400,000) – $430,000 B 1 Depreciation Expense 15000 Accumulated Depreciation—Machinery 15000 (Entry For Depriciation)(3/12 X $60,000) 2 Cash 1,040,000 Accumulated Depreciation—Machinery (360,000+15000) 375,000 Machine 1300000 Gain on Disposal of Machinery 115000 (Being entry for Loss on machine Disposal =($1,040,000 – ($1,300,000 – $375,000)

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