On January 5, 2011, Holstrom Co. disposes of a machine costing $41,600 with accu
ID: 2422645 • Letter: O
Question
On January 5, 2011, Holstrom Co. disposes of a machine costing $41,600 with accumulated depreciation of $22,410. Prepare the entries to record the disposal under each of the following separate assumptions.
The machine is traded in for a newer machine having an $58,100 cash price. A $19,809 trade-in allowance is received, and the balance is paid in cash. Assume the asset exchange lacks commercial substance. (Omit the "$" sign in your response)
Credit
The machine is traded in for a newer machine having an $58,100 cash price. A $14,857 trade-in allowance is received, and the balance is paid in cash. Assume the asset exchange has commercial substance. (Omit the "$" sign in your response)
On January 5, 2011, Holstrom Co. disposes of a machine costing $41,600 with accumulated depreciation of $22,410. Prepare the entries to record the disposal under each of the following separate assumptions.
Explanation / Answer
COST OF MACHINE= $41,600
ACCUMULATED DEPRECIATION= $22,410
VALUE OF MACHINE ON THE DATE OF DISPOSAL=$19,190
IF NEW MACHINE OF VALUE $58,100 IS BOUGHT IN EXCHANGE, TRADE IN ALLOWANCE OF $19,809 IS RECEIVED AND BALANCE IS PAID IN CASH
IF NEW MACHINE OF VALUE $58,100 IS BOUGHT IN EXCHANGE, TRADE IN ALLOWANCE OF $14,857 IS RECEIVED AND BALANCE IS PAID IN CASH
DATE GENERAL JOURNAL DEBIT CREDIT NEW MACHINE 58,100 TO TRADE-IN-ALLOWANCE 19,809 TO OLD MACHINE 19,190 TO CASH 19,101 (BEING NEW MACHINE PURCHASED AND OLD MACHINE DISPOSED OFF)Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.