During the current year, Merkley Company disposed of three different assets. On
ID: 2541929 • Letter: D
Question
During the current year, Merkley Company disposed of three different assets. On January 1 of the current year, prior to their disposal, the accounts reflected the following: OriginalResidual Estimated Depreciation Value 3,000 6 years Life Asset Machine A Machine B MachineC Cost straight line) 12,000 (4 years) 4,000 10 years 45,600 (8 years) 6,700 16 years 51,975 (12 ycars) 21,000 61,000 76,000 The machines were disposed of in the following ways: a. Machine A: Sold on January 1 for $8,500 cash. b. Machine B: Sold on December 31 for $10,300; received cash, $2100, and a $8,200 interest-bearing (12 percent) note receivable due at the end of 12 months. c. Machine C: On January 1, this machine suffered irreparable damage from an accident. On January 10, a salvage company removed the machine at no cost. value: 10.00 points Required 1. Give all joumal entries related to the disposal of each machine in the current year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) a. Machine A Journal entry worksheet Record the disposal of Machine A. Note: Enter debits before credits ansaction General Journal Debit Credit Record entry View general journal Clear entryExplanation / Answer
Answer
Cost
Accumulated Depreciation till Jan 1
Current year depreciation
Book Value before disposal/sale
Sold/Disposed of at
Gain (loss) on disposal/sale
Machine A
$ 21,000.00
$ 12,000.00
$ -
$ 9,000.00
$ 8,500.00
$ (500.00)
Machine B
$ 61,000.00
$ 45,600.00
$ 5,700.00
$ 9,700.00
$ 10,300.00
$ 600.00
Machine C
$ 76,000.00
$ 51,975.00
$ -
$ 24,025.00
$ -
$ (24,025.00)
Date
General Journal
Debit ($)
Credit ($)
MACHINE A
Jan-01
Cash
8500
Loss on sale
500
Accumulated Depreciation
12000
Machine A
21000
(machine a Sold)
MACHINE B
31-Dec
Depreciation expense
5700
Accumulated Depreciation
5700
(annual depreciation on Machine B)
31-Dec
Cash
10300
Accumulated Depreciation
51300
Machine B
61000
Gain on sale
600
(machine a Sold)
MACHINE C
Jan-01
Loss on disposal
24025
Accumulated Depreciation
51975
Machine C
76000
(machine a Sold)
Cost
Accumulated Depreciation till Jan 1
Current year depreciation
Book Value before disposal/sale
Sold/Disposed of at
Gain (loss) on disposal/sale
Machine A
$ 21,000.00
$ 12,000.00
$ -
$ 9,000.00
$ 8,500.00
$ (500.00)
Machine B
$ 61,000.00
$ 45,600.00
$ 5,700.00
$ 9,700.00
$ 10,300.00
$ 600.00
Machine C
$ 76,000.00
$ 51,975.00
$ -
$ 24,025.00
$ -
$ (24,025.00)
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