Raine Company has a machine that originally cost $78,000. Depreciation has been

Question

Raine Company has a machine that originally cost $78,000. Depreciation has been recorded for five years using the straight-line method, with a $15.000 estimated salvage value at the e of an expected nine-year life. After recording depreciation at the end of five years, Raine sells the machine. Prepare the journal entry to record the machine's sale for( dollar): Round to the neare a. $48,000 cash b. $43,000 cash C. $30,000 cash General Journal Description Debit Credit a Cash Accumulated Depreciation- Equipment Gain on Sale of Plant Assets o x Gain on Sale of Plant Assets To record sale of machine b. Cash Cash Loss on Sale of Plant Assets To record sale of machine Cash Equipment Accumulated Depreciation Equipment Net Loss To record sale of machine

Explanation / Answer

Cost of machine: $ 78000 Salvage value: $ 15000 Life: 9 years Annual depreciation= Cost-Salvage / Life = (78000-15000)/9 = 7,000 Accumulated after 5 years: 7000*5= 35,000 Journal entries S.no Accounts title and explanations Debit $ Credit $ a. Cash Account Dr. 48000 Accumulated depreciation Dr. 35000        Machine Equipment Account 78000        Gain on sale of equipment 5000 b. Cash Account Dr. 43000 Accumulated depreciation Dr. 35000        Machine Equipment Account 78000 c. Cash Account Dr. 30000 Accumulated depreciation Dr. 35000 Loss on Sale of machine Dr. 13000        Machine Equipment Account 78000

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