Question

Diaz Company owns a milling machine that cost $250,000 and has accumulated depreciation of $182,00. 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.
2. Diaz sold the machine for $35,000 cash.
3. Diaz sold the machine for $68,000 cash.
4. Diaz sold the machine for $80,000 cash.

Answer 1

Answer:

Explanation:

The journal entries are shown below:

1.  Accumulated depreciation A/c Dr $182,000

   Loss on machine A/c Dr $68,000

              To Machine A/c $250,000

(Being the dispose of the machine is recorded)

2. Cash A/c Dr $35,000

   Accumulated depreciation A/c Dr $182,000

   Loss on machine A/c Dr $33,000

              To Machine A/c $250,000

(Being the sale of the machine is recorded)

3. Cash A/c Dr $68,000

   Accumulated depreciation A/c Dr $182,000

              To Machine A/c $250,000

(Being the sale of the machine is recorded)

4.  Cash A/c Dr $80,000

   Accumulated depreciation A/c Dr $182,000

              To Machine A/c $250,000

              To  Profit on machine A/c Dr $12,000

(Being the sale of the machine is recorded)