of net income reported during a period. 6. On January 1, 2018, Kessler company s
ID: 2587473 • Letter: O
Question
of net income reported during a period. 6. On January 1, 2018, Kessler company sold a machine for $18,400 that it had used for several years. The acquisition cost of the machine was $75,000 with an estimated residual value at time o and had accumulated depreciation of $53,600 at the time of sale. When recording this include a (an) f acquisition of $8,000 transaction, it should Loss on disposal account of $3,000. a. b. Decrease of $21,400 to the Truck account. Gain on disposal account for $3,000. c. d. Gain on disposal account for $5,000Explanation / Answer
Answer:-
Sale value of machine =$18400
Book value of machine =Cost of machine – Accumulated depreciation
=$75000 - $53600 =$21400
Sale value of machine =$18400
Loss on disposal of machine =Book value - Sale value of machine
=$21400-$18400 =$3000
Journal entry:
Cash A/c Dr. $18400
Accumulated depreciation A/c Dr. $53600
Loss on disposal of machine $3000
Machinery $75000
Explanation :- If cash < Book value = Loss (Debit)
If cash > Book value = Gain (Credit)
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