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$1,794,000 496,800 $1,297,200 Date Account Titles and Explanation Debit Credit (

ID: 2571110 • Letter: #

Question

$1,794,000

496,800

$1,297,200

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.)

On December 31, 2017, Sarasota Inc. has a machine with a book value of $1,297,200. The original cost and related accumulated depreciation at this date are as follows.
Machine

$1,794,000

Less: Accumulated depreciation

496,800

Book value

$1,297,200


Depreciation is computed at $82,800 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

1) A fire completely destroys the machine on August 31, 2018. An insurance settlement of $593,400 was received for this casualty. Assume the settlement was received immediately. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

On April 1, 2018, Sarasota sold the machine for $1,435,200 to Dwight Yoakam Company. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)


Date accounts & explanation debit credit 2018 aug 31 Depreciation expenses a/c (82800*8/12) 55200 Accumlated depreciation 55200 (To record current year depreciation) 2018 aug 31 Cash a/c 593400 Accumlated depreciation a/c 552000 Loss on machine from fire 648600 Machine a/c 1794000 (To record loss on machine)