Rayya Co. purchases and installs a machine on January 1, 2017, at a total cost o

Question

Rayya Co. purchases and installs a machine on January 1, 2017, at a total cost of $92,400. 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 $46,200 cash. (2) An insurance settlement of $38,808 is received due to the machine's total destruction in a fire. iew transaction list 1 Record the depreciation expense as of July 1, 2021 $46,200 cash. of $38,808 due to the machine's total 1. 2 Record the sale of the machinery for 3 Record the insurance settlement received destruction in a fire. Credit Note :·journal entry has been entered Record entry Clear entry View general journal

Explanation / Answer

Depreciation expense (92,400)/8 11550 Journal entry Accounting titles & Explanations Debit Credit 1) Depreciation expense 5775 Accumulated Depreciation 5,775 (11550*6/12) 2) Cash 46,200 Accumulated depreciation (11550*4+5775) 51975 Gain on disposal 5,775 Machine 92,400 3) Cash 38,808 Accumulated depreciation (11550*4+5775) 51975 loss on disposal 1,617 Machine 92,400

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