Answer:
The accounting entry under each condition is given below.
The machine is sold for $18,250 cash
Debit Cash Asset $ 18,250
Debit accumulated depreciation $ 24,625
Debit Loss on disposal $ 1,125
Credit Machine Cost $ 44,000
The machine is traded in for a new machine having a $60,200 cash price. A $25,000 trade-in allowance is received, and the balance is paid in cash.
Debit New Machine Asset $ 60,200
Debit accumulated depreciation $ 24,625
Credit profit on disposal $ 5,625
Credit Machine Cost $ 44,000
Credit Cash Asset (60,200-25,000) $ 35,200
The machine is traded in for a new machine having a $60,200 cash price. A $15,000 trade-in allowance is received,
Debit New Machine Asset $ 60,200
Debit accumulated depreciation $ 24,625
Debit loss on disposal $ 4,375
Credit Machine Cost $ 44,000
Credit Cash Asset (60,200-15,000) $ 45,200
