Question

Diaz Company owns a machine that cost $250,000 and has accumulated depreciation of $182,000. Prepare the entry to record the disposal of the machine on January 1 in each seperate situation. a) The machine needed extensive repairs and was not worth repairing. b) Diaz disposed of the machine, receiving nothing in return. c) Diaz sold the machine for $35,000 cash. d) Diaz sold the machine for $68,000 cash. e) Diaz sold the machine for $80,000 cash.

Answer 1

Answer: There will be separate entries for all the situations.

Explanation:

Entry 1 Loss on disposal of the machine 68000                      Accumulated depreciation of the machine 182000                       machine 250000    

Entry 2 Cash 35000

Loss on sale of machines 33000

Accumulated depreciation 182000

machine 25000

Entry 3 Cash 68000

Accumulated depreciation - machine 182000

machine 250000                                                                                                                                                    

Entry 4 Cash 80000  

Accumulated depreciation - machine 182000

Gain on sale of machine 12000

machine 250000