Answer:
<em>Requirement 1</em>
January 2
Machine $152,000 (debit)
Cash $152,000 (credit)
January 3
Machine $1,600 (debit)
Cash $1,600 (debit)
<em>Requirement 2</em>
(a) Its first year in operations.
Depreciation Charge =$22,720
(b) The year of its disposal.
Depreciation Charge =$22,720
<em>Requirement 3(a)</em>
Cash $20,500 (debit)
Accumulated Depreciation $113,600 (debit)
Loss on Sale of Machine $ 19,500 (debit)
Machine 153,600 (credit)
<em>Requirement 3(b)</em>
Cash $82,000 (debit)
Accumulated Depreciation $113,600 (debit)
Profit on Sale of Machine $ 42,000 (credit)
Machine 153,600 (credit)
<em>Requirement 3(a)</em>
Cash - Insurance Compensation $31,000 (debit)
Accumulated Depreciation $113,600 (debit)
Loss on Compensation $ 9,000 (debit)
Machine 153,600 (credit)
Explanation:
<em>Requirement 1</em>
January 2
Machine $152,000 (debit)
Cash $152,000 (credit)
January 3
Machine $1,600 (debit)
Cash $1,600 (debit)
<em>Requirement 2</em>
Depreciation Charge = (Cost - Salvage Value)/Useful Life
=(($152,000+$1,600)-$17,280)/6
=$22,720
(a) Its first year in operations.
Depreciation Charge =$22,720
(b) The year of its disposal.
Depreciation Charge =$22,720
<em>Requirement 3(a)</em>
Cash $20,500 (debit)
Accumulated Depreciation $113,600 (debit)
Loss on Sale of Machine $ 19,500 (debit)
Machine 153,600 (credit)
<em>Requirement 3(b)</em>
Cash $82,000 (debit)
Accumulated Depreciation $113,600 (debit)
Profit on Sale of Machine $ 42,000 (credit)
Machine 153,600 (credit)
<em>Requirement 3(a)</em>
Cash - Insurance Compensation $31,000 (debit)
Accumulated Depreciation $113,600 (debit)
Loss on Compensation $ 9,000 (debit)
Machine 153,600 (credit)