PB9-2 Recording and Interpreting the Disposal of Long-Lived Assets LO 9-5 During

Question

PB9-2 Recording and Interpreting the Disposal of Long-Lived Assets LO 9-5 During the current year, Rayon Corporation disposed of two different assets. On January 1, prior to their disposal, the accounts reflected the following Original Cost Machine A $60,000 $11,000 Accumulated Depreciation straight-line) Residual Value Estimated Life 7 years 5 years Asset $28,000 (4 years) Machine B 14,200 1,925 7,365 (3 years) The machines were disposed of in the following ways: a. Machine A: Sold on January 2, for $33,500 cash b. Machine B: On January 2, this machine suffered irreparable damage from an accident and was removed immediately by a salvage company at no cost. Required: 1&2. Give the journal entries related to the disposal of Machine A and Machine B on January 2 of the current year. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet 2 3 4 Record the current year depreciation for Machine A prior to disposal. Note: Enter debits before credits. Date General Journal Debit Credit January 02 Record entry Clear entry View general journal

Explanation / Answer

Journal entry :

No accounts & explanation debit credit 1 No entry 2 Cash 33500 Accumlated depreciation-Machine A 28000 Gain on sale of machine A 1500 Machine A 60000 (To record sale of machine) 3 No entry 4 Accumlated depreciation-Machine B 7365 Loss on disposal of machine B 6835 Machine B 14200 (To record disposal of machine B)

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