During the current year, Martinez Company disposed of two different assets. On J

Question

During the current year, Martinez Company disposed of two different assets. On January 1, prior to their disposal, the accounts reflected the following: Original Residual Asset Machine A $79,200 Machine B 23,000 Cost Value S5,500 2,600 Life 15 years 8 years (straight-line) S63,873 (13 years) 15,300 (6 years) The machines were disposed of in the following ways a. Machine A: Sold on January 2 for $23,000 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 o disposal.

Explanation / Answer

  a) Machine A sold on January 2, 2014 for $23,000 cash

Book value = 79,200 - 63,873 = 15,327

b) Machine B on January 2, 2014, this machine suffered irreparable damage from an accident and was removed immediately by a salvage company at no cost.

Book value = 23,000 - 15,300 = 11,200

Date General Journal Debit Credit Jan 02 Cash 23000 Accumulated Depreciation--Machine A 63873 Loss on Disposal 7673 Machine A 79200

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