Exercise 3 - Disposal of assets The Welch Corporation had the following machine

Question

Exercise 3 - Disposal of assets The Welch Corporation had the following machine recorded in its books on December 31, 2017: Machine (cost) Accumulated depreciation 70,000 55,750 The useful life of the machine is 14 years and there is no salvage value. The firm uses straight-line deprecation. The Welch Corporation decided to sell the machine on March 31, 2018. Required: 1. Record the journal entry for the deprecation expense of the machine in 2018 (up to the selling date) 2. Record the journal entry for the sale of the machine under 3 different assumptions: a. The machine was sold for $3,000 cash b. The machine was sold for $13,000 cash. c. The machine was sold for $20,000 cash.

Explanation / Answer

1) Journal entry for depreciation :

2) Record entry for sale :

Date accounts & explanation debit credit Mar 31,2018 Depreciation expense (70000/14)*3/12 1250     Accumlated depreciation 1250

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