Question

Diaz Company owns a milling machine that cost $126,500 and has accumulated depreciation of $92,600. Prepare the entry to record the disposal of the milling machine on January 3 under each of the following independent situations. The machine needed extensive repairs, and it was not worth repairing. Diaz disposed of the machine, receiving nothing in return. Diaz sold the machine for $16,200 cash. Diaz sold the machine for $33,900 cash. Diaz sold the machine for $40,900 cash.

Answer 1

Answer and Explanation:

The journal entries are shown below:

1 Accumulated Depreciation - Machine Equipment $92,600

  Loss on Disposal $33,900 (balancing figure)

         To  Machine Equipment  $126,500

(being the disposal of the machine is recorded)  

2. Cash $16,200

Accumulated Depreciation - Machine Equipment $92,600  

Loss on sale/disposal $17,700 (balancing figure)

             To Machine Equipment  $126,500

(being the disposal of the machine is recorded)  

3 Cash $33,900

Accumulated Depreciation - Machine Equipment $92,600  

         To  Machine Equipment  $126,500

(being the disposal of the machine is recorded)  

4 Cash $40,900  

 Accumulated Depreciation - Machine Equipment $92,600  

     To  Gain on sale/disposal $7,000 (balancing figure)

     To Machine Equipment  $126,500

(being the disposal of the machine is recorded)