$1,898,000 525,600 $1,372,400 Date Account Titles and Explanation Debit Credit (
ID: 2570120 • Letter: #
Question
$1,898,000
525,600
$1,372,400
Date
Account Titles and Explanation
Debit
Credit
(To record current depreciation.)
(To record loss of the machine.)
SHOW LIST OF ACCOUNTS
LINK TO TEXT
Date
Account Titles and Explanation
Debit
Credit
(To record current depreciation.)
(To record sale of the machine.)
SHOW LIST OF ACCOUNTS
LINK TO TEXT
Date
Account Titles and Explanation
Debit
Credit
(To record current depreciation.)
(To record donation of the machine.)
On December 31, 2017, Headland Inc. has a machine with a book value of $1,372,400. The original cost and related accumulated depreciation at this date are as follows.Machine
$1,898,000
Less: Accumulated depreciation525,600
Book value$1,372,400
Depreciation is computed at $87,600 per year on a straight-line basis.
Presented below is a set of independent situations. For each independent situation, indicate the journal entry to be made to record the transaction. Make sure that depreciation entries are made to update the book value of the machine prior to its disposal.
Explanation / Answer
Answer a
Current depreciation Expenses till August 31, 2018 = ($87,600 / 12 months ) * 8 months = $58,400
Total Accumulated depreciation til August 31, 2018 = $525,600 +$58,400 = $584,000
Loss on Disposal of Machine = Book value - Current depreciation till Aug , 2018 - Cash settlement
($1,372,400 - $58,400) - $627,800 = $686,200
Journal Entries
Answer b
Current depreciation Expenses till March31, 2018 = ($87,600 / 12 months ) * 3 months = $21,900
Total Accumulated depreciation till April 1, 2018 = $525,600 +$21,900 = $547,500
Gain on sales of Machine = Cash received on sales - (Book value - Current depreciation till March , 2018 )
$1,518,400 - ($1,372,400 - $21,900) = $167,900
Journal Entries
Answer c
Current depreciation Expenses till July 31, 2018 = ($87,600 / 12 months ) * 7 months = $51,100
Total Accumulated depreciation till July 31, 2018 = $525,600 +$51,100 = $576,700
Gain on danation of Machine = FV on date of sale - (Book value - Current depreciation till July , 2018)
$1,606,000 - ($1,372,400 - $51,100) = $284,700
Journal Entries
Date Account Titles and Explanation Debit ($) Credit ($) August 31, 2018 Depreciation Expense 58,400 Accumulated Depreciation - Machine 58,400 (To record current depreciation) August 31, 2018 Cash 627,800 Accumulated Depreciation - Machine 584,000 Loss on disposal of Machine 686200 Machine 1,898,000 (To record loss on Machine)Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.