Finesse Co. purchases and installs a machine on January 1, 2011, at a total cost
ID: 2372313 • Letter: F
Question
Finesse Co. purchases and installs a machine on January 1, 2011, at a total cost of $92,750. Straight-line depreciation is taken each year for four years assuming a seven-year life and no salvage value. The machine is disposed of on July 1, 2015, during its fifth year of service.
Prepare entries to record the partial year’s depreciation on July 1, 2015
Prepare entries to record the disposal under the following separate assumptions:
Finesse receives an insurance settlement of $30,000 resulting from the total destruction of the machine in a fire
Prepare entries to record the disposal under the following separate assumptions:
Explanation / Answer
92,750/7= 13250
DR Depreciation expense 6625
CR Accumulated depreciation 6625
DR Cash 35,000
DR Accumulated Depreciation 59,625
CR Equipment 92,750
CR Gain on sale of equipment 1,875
DR Cash 30,000
DR Accumulated Depreciation 59,625
DR Loss on disposal of equip 3,125
Cr Equipment 92,750
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