CP9-2 Recording and Interpreting the Disposal of Long-Lived Assets [LO 9-5] Duri

Question

CP9-2 Recording and Interpreting the Disposal of Long-Lived Assets [LO 9-5] During the current year, Martinez Company disposed of two different assets. On January 1, prior to their disposal, the accounts reflected the following: Asset Machine A $84,200 Machine B 28,000 Original Residual Value $9,000 3,600 Estimated Life 15 years 8 years Accumulated Depreciation (straight-line) $65,173 (13 years) 18,300 (6 years) Cost The machines were disposed of in the following ways a. Machine A: Sold on January 2 for $28,000 cash. b. Machine B: On January 2, this machine suffered irreparable damage from an accident and was removed immediately by a salvage company at no cost. Required 1. & 2. Prepare the journal entries related to the disposal of Machine A and B on January 2 of the current year. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) TIP: When no cash is received on disposal, the loss on disposal will equal the book value of the asset at the time of disposal View transaction list Journal entry worksheet Record the disposal of Machine A for $28,000 cash on January 2, 2014 Note: Enter debits before credits. Date General Journal Debit Credit Jan 02

Explanation / Answer

b.

date general journal debit credit jan 02 Cash a/c $28,000 Accumulated depreciation $65,173 .............To Gain on sale of machine ($28,000+$65,173-$84,200) $8,973 .............To Machine A $84,200 (being sale of machine A for a gain)

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