A company purchased and installed a machine on January 1, 2011, at a total cost

Question

A company purchased and installed a machine on January 1, 2011, at a total cost o line depreciation was calculated based on the assumption of a five-year life and no salvage machine was disposed of on July 1,2014 a. Prepare the general journal entry to update depreciation to July 1, 2014 b. Prepare the general journal entry to record the disposal of the machine under each of these three independent situations 3. value. The (1) The machine was sold for $22,000 cash. (2) The machine was sold for $15,000 cash. (3) The machine was totally destroyed in a fire and the insurance company settled the claim for $18,000 cash. Date Account Description Debit Credit a. b.1 b.2 b.3 A company purchased equipment for $325,000 on January 2,2013. The company expects the equipmert to last for eight years or 60,000 hours of operation, with an estimated salvage value of $25,000. During 2013, the equipment was in operations for 8,000 hours, while in 2014 the equipment was in operations for 8,700 the following depreciation methods: hours, Compute the depreciation expense relating to the equipment for 2013 and 2014 using

Explanation / Answer

3 (a)

To Accumulated Depreciation on Machinery A/c

To Accumulated Depreciation on Machinery

To Accumulated Depreciation on Machinery

To Accumulated Depreciation on Machinery

OR: A single entry can be passed

Depreciation A/c Dr. 50,400

To Accumulated Depreciation on Machinery 50,400

3. (b)

To Machinery A/c

To gain on sale of machinery

To Machinery A/c

To Insurance Claim Received

To Machinery A/c

Date Particulars Debit Credit Dec 31, 2011 Depreciation A/c Dr. 14,400

To Accumulated Depreciation on Machinery A/c

14,400 Dec 31, 2012 Depreciation A/c Dr. 14,400

To Accumulated Depreciation on Machinery

14,400 Dec 31, 2013 Depreciation A/c Dr. 14,400

To Accumulated Depreciation on Machinery

14,400 July 1, 2014 Depreciation A/c Dr. 7,200

To Accumulated Depreciation on Machinery

7,200

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