During the current year, Merkley Company disposed of three different assets. On

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 entry

Explanation / Answer

Asset Original Cost Residual Value Estimated Life Accumulated Depreciation Accumulated Depreciation Years Machine A 21000 3000 6 12000 4 Machine B 61000 4000 10 45600 8 Machine C 76000 6700 16 51975 12 Asset Original Cost Residual Value Estimated Life Depreciation PA Machine A 21000 3000 6 3000 (Original Cost-Residul Value)/Life Machine B 61000 4000 10 5700 Machine C 76000 6700 16 4331.25 Journal Entries for Disposal: Machine A 01-Jan Cash Account Dr. 8500 Accumulated Depreciation Account Dr 12000 Loss on Disposal Account Dr. 500 To Machine A Account 21000 (Being Sale recorded) Asset Original Cost Accumulated Depreciation Book Value Sales Value (Loss)/Gain Machine A 21000 12000 9000 8500 -500 Machine B 31-Dec Depreciation Account Dr. 5700 To Accumulated Depreciation Account 5700 (Being Depreciation recorded) Machine B 31-Dec Cash Account Dr. 2100 12% Note Recieavble Account Dr. 8200 Accumulated Depreciation Account Dr 51300 To Profit on Disposal Account 600 To Machine B Account 61000 (Being Sale recorded) Asset Original Cost Accumulated Depreciation Book Value Sales Value (Loss)/Gain Machine B 61000 51300 9700 10300 600 (Incl Current Year) Machine B 31-Dec Accumulated Depreciation Account Dr 51975 Loss on Disposal Account Dr. 24025 To Machine C Account 76000 (Being Disposal recorded) Asset Original Cost Accumulated Depreciation Book Value Sales Value (Loss)/Gain Machine C 76000 51975 24025 0 -24025

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