Rayya Co. purchases and installs a machine on January 1, 2016, at a total cost o
ID: 2538969 • Letter: R
Question
Rayya Co. purchases and installs a machine on January 1, 2016, at a total cost of $142,800. Straight-line depreciation is taken each year for four years assuming a eight-year life and no salvage value. The machine is disposed of on July 1, 2020, during its fifth year of service.
Prepare entries to record the partial year’s depreciation on July 1, 2020.
Record the depreciation expense as of July 1, 2020.
Prepare entries to record the disposal under the following separate assumptions:
1. The machine is sold for $71,400 cash.|
Record the sale of machinery for $71,400 cash.
2. An insurance settlement of $59,976 is received due to the machine’s total destruction in a fire.
Record the insurance settlement received of $59,976 resulting from the total destruction of the machine in a fire.
Explanation / Answer
Record the depreciation expense as of July 1, 2020.
Record the sale of machinery for $71,400 cash.
Record the insurance settlement received of $59,976 resulting from the total destruction of the machine in a fire.
Date accounts & explanation debit Credit 2020, july 1 Depreciation expense (142800/8)*6/12 8925 Accumlated depreciation 8925 (To record depreciation)Related Questions
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