On December 31, 2014, Travis Tritt Inc. has a machine with a book value of $991,

Question

On December 31, 2014, Travis Tritt Inc. has a machine with a book value of $991,700. The original cost and related accumulated depreciation at this date are as follows.

$1,371,500

379,800

$991,700

Depreciation is computed at $63,300 per year on a straight-line basis.

Presented below is a set of independent situations. For each independent situation, indicate the journal entry to be made to record the transaction. Make sure that depreciation entries are made to update the book value of the machine prior to its disposal.

A fire completely destroys the machine on August 31, 2015. An insurance settlement of $453,650 was received for this casualty. Assume the settlement was received immediately.

On April 1, 2015, Tritt sold the machine for $1,097,200 to Dwight Yoakam Company.

On July 31, 2015, the company donated this machine to the Mountain King City Council. The fair value of the machine at the time of the donation was estimated to be $1,160,500.

$1,371,500

379,800

$991,700

Explanation / Answer

accumulate depreciation upto 31st august 2015 is 63300/8=> 7912 + 379800=> 387712

and cost of machine => 1371500

journalentry

Insurer A/c dr. $453650

Ac. Dep A/c dr. $387712

Loss A/cDr. $530138

To Machine A/c cr. $1371500

2)

Cash A/c Dr. $453650

To Insurer A/c cr. $453650

on sale of Machinery

Accumulated de => 63300/ 3 + 379800=> $400900

Cash A/c dr. $1097200

Accu. dep A/c dr. $400900

To Gain on Asset disposal A/c cr. $126600

To Machine A/c cr. $1371500

on donation

Acc. dep => 63300/7 +379800 => 388843

Charity A/c dr. $1160500

Acc. Dep A/c dr. $388843

To Machine A/c cr. $1371500

To Gain on CharityA/c cr. $177843

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.