On December 31, 2017, Tamarisk Inc. has a machine with a book value of $1,052,80

Question

On December 31, 2017, Tamarisk Inc. has a machine with a book value of $1,052,800. The original cost and related accumulated depreciation at this date are as follows. Machine $1,456,000 Less: Accumulated depreciation 403,200 Book value $1,052,800 Depreciation is computed at $67,200 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. A fire completely destroys the machine on August 31, 2018. An insurance settlement of $481,600 was received for this casualty. Assume the settlement was received immediately. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit August 31, 2018 (To record current depreciation.) August 31, 2018 (To record loss of the machine.) On April 1, 2018, Tamarisk sold the machine for $1,164,800 to Dwight Yoakam Company. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit April 1, 2018 (To record current depreciation.) April 1, 2018 (To record sale of the machine.) On July 31, 2018, the company donated this machine to the Mountain King City Council. The fair value of the machine at the time of the donation was estimated to be $1,232,000. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit July 31, 2018 (To record current depreciation.) July 31, 2018 (To record donation of the machine.)

Explanation / Answer

1 TO RECORD DEPRECIATION UPTO AUG 31, 2018 Particulars Debit Credit Depreciation A/c                        44,800            To accumulated depreciation                        44,800 (67200*8/12) To Record Loss on Sale of Machinery - Aug 31, 2018 Particulars Debit Credit Accumulated Depreciation                     4,48,000 (403200+44800) Bank A/c                     4,81,600 Loss on Sale of Machinery                     5,26,400                      TO Machine A/c                   14,56,000 (Being Insurance claim received and loss on sale booked) 2 To record depreciation on April 01, 2018 Particulars Debit Credit NO ENTRY To record sale of machine on April 01, 2018 Particulars Debit Credit Accumulated Depreciation                     4,03,200 Bank A/c                   11,64,800                    Profit on Sale of Machinery                     1,12,000                      TO Machine A/c                   14,56,000 3 TO RECORD DEPRECIATION UPTO July 31, 2018 Particulars Debit Credit Depreciation A/c                        39,200            To accumulated depreciation                        39,200 (67200*7/12) To Record donation of Machinery - july 31, 2018 Particulars Debit Credit Accumulated Depreciation                     4,42,400 (403200+39200) Loss on donation of Machinery                   10,13,600                      TO Machine A/c                   14,56,000 (Being machine donated and loss booked)

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