Academic Integrity: tutoring, explanations, and feedback — we don’t complete graded work or submit on a student’s behalf.

$1,898,000 525,600 $1,372,400 Date Account Titles and Explanation Debit Credit (

ID: 2570120 • Letter: #

Question

$1,898,000

525,600

$1,372,400

Date

Account Titles and Explanation

Debit

Credit

(To record current depreciation.)

(To record loss of the machine.)

SHOW LIST OF ACCOUNTS

LINK TO TEXT

Date

Account Titles and Explanation

Debit

Credit

(To record current depreciation.)

(To record sale of the machine.)

SHOW LIST OF ACCOUNTS

LINK TO TEXT

Date

Account Titles and Explanation

Debit

Credit

(To record current depreciation.)

(To record donation of the machine.)

On December 31, 2017, Headland Inc. has a machine with a book value of $1,372,400. The original cost and related accumulated depreciation at this date are as follows.
Machine

$1,898,000

Less: Accumulated depreciation

525,600

Book value

$1,372,400


Depreciation is computed at $87,600 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.

Explanation / Answer

Answer a

Current depreciation Expenses till August 31, 2018 = ($87,600 / 12 months ) * 8 months = $58,400

Total Accumulated depreciation til August 31, 2018 = $525,600 +$58,400 = $584,000

Loss on Disposal of Machine = Book value - Current depreciation till Aug , 2018 - Cash settlement

($1,372,400 - $58,400) - $627,800 = $686,200

Journal Entries

Answer b

Current depreciation Expenses till March31, 2018 = ($87,600 / 12 months ) * 3 months = $21,900

Total Accumulated depreciation till April 1, 2018 = $525,600 +$21,900 = $547,500

Gain on sales of Machine = Cash received on sales - (Book value - Current depreciation till March , 2018 )

$1,518,400 - ($1,372,400 - $21,900) = $167,900

Journal Entries

Answer c

Current depreciation Expenses till July 31, 2018 = ($87,600 / 12 months ) * 7 months = $51,100

Total Accumulated depreciation till July 31, 2018 = $525,600 +$51,100 = $576,700

Gain on danation of Machine = FV on date of sale - (Book value - Current depreciation till July , 2018)

$1,606,000 - ($1,372,400 - $51,100) = $284,700

Journal Entries

Date Account Titles and Explanation Debit ($) Credit ($) August 31, 2018 Depreciation Expense 58,400 Accumulated Depreciation - Machine 58,400 (To record current depreciation) August 31, 2018 Cash 627,800 Accumulated Depreciation - Machine 584,000 Loss on disposal of Machine 686200 Machine 1,898,000 (To record loss on Machine)