Rayya Co. purchases and installs a machine on January 1, 2017, at a total cost o
ID: 2577198 • Letter: R
Question
Rayya Co. purchases and installs a machine on January 1, 2017, at a total cost of $184,800. Straight-line depreciation is taken each year for four years assuming a eight-year life and no salvage value. The machine is disposed of on July 1, 2021, during its fifth year of service.
Prepare entries to record the partial year’s depreciation on July 1, 2021, and to record the disposal under the following separate assumptions: (1) The machine is sold for $92,400 cash. (2) An insurance settlement of $77,616 is received due to the machine’s total destruction in a fire.
Explanation / Answer
Prepare journal entries ;
Date accounts & explanation debit credit 2021 july 1 Depreciation expenses a/c (184800/8)*6/12 11550 Accumlated depreciation a/c 11550 (To record depreciation expenses) 2021 july 1 Cash a/c 92400 Accumlated depreciation (184800/8)*4.5 103950 Gain on sale of machine 11550 Machine a/c 184800 (To record sale of machine) July 1,2021 Cash a/c 77616 Accumlated depreciation 103950 Loss on destruction of fire 3234 Machine a/c 184800 (To record machine destruction)Related Questions
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