Exercise 10-24 On December 31, 2014, Travis Tritt Inc. has a machine with a book

Question

Exercise 10-24 On December 31, 2014, Travis Tritt Inc. has a machine with a book value of $1,889,400. The original cost and related accumulated depreciation at this date are as follows. Machine $2,613,000 Less: Accumulated depreciation 723,600 Book value $1,889,400 Depreciation is computed at $120,600 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 $864,300 was received for this casualty. Assume the settlement was received immediately. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit August 31, 2015 (To record current depreciation.) August 31, 2015 (To record loss of the machine.) SHOW LIST OF ACCOUNTS LINK TO TEXT On April 1, 2015, Tritt sold the machine for $2,090,400 to Dwight Yoakam Company. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit April 1, 2015 (To record current depreciation.) April 1, 2015 (To record sale of the machine.) SHOW LIST OF ACCOUNTS LINK TO TEXT 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 $2,211,000. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit July 31, 2015 (To record current depreciation.) July 31, 2015 (To record donation of the machine.)

Explanation / Answer

Machine $2,613,000 2613000 Accumulated depreciation 723,600 723600 book value at year end 1889400 depreciation 80400 book value at august 31 1809000 insurance claim received 864300 loss on machine 944700 Entry 1 depreciation debit 80400 credit accumulated depreciation 80400 2 accumulated depreciation debit 804000 insurance claim debit 864300 loss on machine debit 944700 credit machine 2613000 situation 2 Machine $2,613,000 2613000 Accumulated depreciation 723,600 723600 book value at year end 1889400 depreciation 30150 book value at august 31 1859250 machine sold 2,090,400 profit on sale of machine 231,150 Entry 1 depreciation debit 30150 credit accumulated depreciation 30150 2 cash debit 2,090,400 accumulated depreciation debit 753750 credit machine 2613000 credit profit on sale of machine 231,150 situation 3 Machine $2,613,000 2613000 Accumulated depreciation 723,600 723600 book value at year end 1889400 depreciation 70350 book value at august 31 1819050 machine sold 2,090,400 Entry 1 depreciation debit 70350 credit accumulated depreciation 70350 2 donation of machine debit 2211000 accumulated depreciation debit 793950 credit machine 2613000 credit excess value on donation of machine 391950

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