Question

Diaz Company owns a milling machine that cost $126,600 and has accumulated depreciation of $92,600. Prepare the entry to record the disposal of the milling machine on January 3 under each of the following independent situations.
1. The machine needed extensive repairs, and it was not worth repairing. Diaz disposed of the machine, receiving nothing in return.
Record the disposal of the machine receiving nothing in return.
2. Diaz sold the machine for $17,500 cash.Record the sale of the machine for $17,500 cash.
3. Diaz sold the machine for $34,000 cash.
Record the sale of the machine for $34,000 cash.
4. Diaz sold the machine for $40,900 cash.
Record the sale of the machine for $40,900 cash.

Answer 1

Answer:

The Journal entries are as follows:

(i)

Accumulated Depreciation - Machine Equipment A/c Dr. $92,600

Loss on Disposal A/c Dr. $34,000

  To Machine Equipment                   $126,600

(To record the disposal)

(ii)

Cash A/c Dr. $17,500

Accumulated Depreciation - Machine Equipment A/c Dr. $92,600

Loss on sale/disposal A/c Dr. $16,500

    To Machine Equipment                     $126,600

(To record the sale)

(iii)

Cash A/c Dr. $34,000

Accumulated Depreciation - Machine Equipment A/c Dr. $92,600

    To Machine Equipment                     $126,600

(To record the sale)

(iv)

Cash A/c Dr. $40,900

Accumulated Depreciation - Machine Equipment A/c Dr. $92,600

    To Gain on sale/disposal A/c            $6,900

    To Machine Equipment                     $126,600

(To record the sale)