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dalvyx [7]
3 years ago
15

Rayya Co. purchases a machine for $105,000 on January 1, 2019. Straight-line depreciation is taken each year for four years assu

ming a seven-year life and no salvage value. The machine is sold on July 1, 2023, during its fifth year of service. Prepare entries to record the partial year’s depreciation on July 1, 2023, and to record the sale under each separate situation. (1) The machine is sold for $45,500 cash. (2) The machine is sold for $25,000 cash.
Business
1 answer:
Elina [12.6K]3 years ago
3 0

Answer:

Entry to record the partial year’s depreciation on July 1, 2023:

Debit Depreciation Expense $7,500

Credit Accumulated depreciation account  $7,500

1) The machine is sold for $45,500 cash:

Debit Cash $45,500

Debit Accumulated depreciation account $67,500

Credit Gain on asset selling $8,000

Credit Machine asset $105,000

(2) The machine is sold for $25,000 cash

Debit Cash $25,000

Debit Accumulated depreciation account $67,500

Debit Loss on asset selling $12,500

Credit Machine asset $105,000

Explanation:

Rayya Co. uses straight-line depreciation method, Depreciation Expense each year is calculated by following formula:

Annual Depreciation Expense = (Cost of machine − Salvage Value )/Useful Life = ($105,000 - $0)/7 = $15,000

In 2023, the machine is used for 6 months (half year)

Depreciation Expense = $15,000/2 = $7,500

Entry to record the partial year’s depreciation on July 1, 2023:

Debit Depreciation Expense $7,500

Credit Accumulated depreciation account  $7,500

On July 1, 2023, Accumulated depreciation = $15,000 x 4 + $7,500 = $67,500

Carrying amount of the machine = $105,000 - $67,500 = $37,500

(1) The machine is sold for $45,500 cash:

Sale price - Carrying amount of the machine = $45,500 - $37,500 = $8,000>0

=> The company recognizes gain on the sales $8,000

Debit Cash $45,500

Debit Accumulated depreciation account $67,500

Credit Gain on asset selling $8,000

Credit Machine asset $105,000

(2) The machine is sold for $25,000 cash

Sale price - Carrying amount of the machine = $25,000 - $37,500 = -$12,500<0

=> The company recognizes loss on the sales $12,500

The entry should be made:  

Debit Cash $25,000

Debit Accumulated depreciation account $67,500

Debit Loss on asset selling $12,500

Credit Machine asset $105,000

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State ownership

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State ownership, or government ownership, or public ownership, is a form of ownership were the government owns or partly owns as well has control over a business with the revenue from the business or establishment being added as benefits accruable to the welfare of the public

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6 0
2 years ago
A company has net income of $ 225,000 and declares and pays dividends in the amount of $ 75,000 . What is the net impact on reta
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A company has net income of $ 225,000 and declares and pays dividends in the amount of $ 75,000 .

c. An increase of $ 150,000 is the net impact on retained earnings is the correct option.

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For most people, income means gross income in the form of wages and salaries, return on investment, pension payments, and other income.

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7 0
2 years ago
Cecelia's government provides for her basic needs. In return, Cecelia works in the factory downtown, as she always has since the
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The choices can be found elsewhere and as follows:

<span>A. a market system
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3 years ago
The following information is from the materials requisitions and time tickets for Job 9-1005 completed by Great Bay Boats. The r
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Answer:

Total cost for Job 9-1005 = $ 5,085

Explanation:

Calculation for total cost for Job 9-1005

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Q-4698          $1,250

Q-4725          <u>$1,000</u>

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W-3479          $ 450

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Answer:

A License

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