Question

Diaz Company owns a machine that cost $250,000 and has accumulated depreciation of $182,000. Prepare the entry to record the disposal of the machine on January 1 in each seperate situation.
The machine needed extensive repairs and was not worth repairing. Diaz disposed of the machine, receiving nothing in return.

Diaz sold the machine for $35,000 cash.
Diaz sold the machine for $68,000 cash.
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 disposal of machine A/c Dr $68,000

         To Machine A/c                                $250,000

(Being the machine disposed off)

2. Accumulated Depreciation A/c Dr $182,000

  Loss on disposal of machine A/c Dr $33,000

  Cash A/c Dr $35,000

         To Machine A/c                                $250,000

(Being machine sold for $35,000)

3. Accumulated Depreciation A/c Dr $182,000

  Cash A/c Dr $68,000

         To Machine A/c                                $250,000

(Being machine sold for $68,000)

4. Accumulated Depreciation A/c Dr $182,000

  Cash A/c Dr $80,000

         To Machine A/c                                $250,000

         To profit on disposal of machine A/c Dr $12,000

(Being machine sold for $80,000)