Question

On January 2, Bering Co. disposes of a machine costing $40,400 with accumulated depreciation of $21,763. Prepare the entries to record the disposal under each separate situation.The machine is sold for $15,631 cash.The machine is traded in for a new machine having a $56,900 cash price. A $19,238 trade-in allowance is received, and the balance is paid in cash. Assume the asset exchange has commercial substance.The machine is traded in for a new machine having a $56,900 cash price. A $14,429 trade-in allowance is received, and the balance is paid in cash. Assume the asset exchange has commercial substance.

Answer 1

Answer:

Explanation:

1.   Cash   Dr. $15,631

     Accumulated depreciation Dr.$21,763

     Loss on disposal(40,400-21,763-15,631)                  Dr.$3,006

      Machine                    Cr.$40,400

2. Machine-New (56,900-19,238) Dr.$37,662

   Cash      Dr.$19,238

  Accumulated Depreciation  Dr.$21,763

 Machine Old                       Cr.$40,400

Cash     (56,900-19,238)      Cr.$37,662

 Gain on disposal (40,400-21,763-19238)               Cr.$601  

3.  New Machine (56,900-14,429)   Dr.$42,471

    Cash                 Dr.$14,429

 Accumulated Depreciation          Dr.$21,763

 Loss on disposal(40,400-21,763-14,429)                  Dr.$4,208

Machine Old     Cr.$40,400

Cash                 Cr.$42,471