A company purchased a machine for $200,000. The accumulated depreciation on the

Question

A company purchased a machine for $200,000. The accumulated depreciation on the machine is now $130,000. The machine is junked. Which journal entry is prepared to record the disposal?

A.

debit Loss on Disposal of Machine for $70,000, debit Accumulated Depreciation

minus

Machine for $130,000 and credit Machine for $200,000

B.

debit Accumulated Depreciation

minus

Machine for $130,000 and credit Machine for $130,000

C.

debit Loss on Disposal of Machine for $70,000, debit Accumulated Depreciation

minus

Machine $70,000 and credit Machine for $140,000

D.

debit Accumulated Depreciation

minus

Machine for $200,000, credit Machine for $130,000 and credit Gain on Disposal of Machine for $70,000

Explanation / Answer

The journal entry is:

Accumulated depreciation a/c..Dr$130,000

Loss on disposal ..Dr$70,000

To machine $200,000

Hence the correct option is A.

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