Business, 24.03.2020 20:07 caro74

Diaz Company owns a machine that cost $126,000 and has accumulated depreciation of $94,600. Prepare the entry to record the disposal of the machine on January 1 in each seperate situation.

1. The machine needed extensive repairs, and it was not worth repairing. Diaz disposed of the machine, receiving nothing in return.
Record the disposal of the machine receiving nothing in return.
2. Diaz sold the machine for $17,500 cash.
Record the sale of the machine for $17,500 cash.
3. Diaz sold the machine for $34,000 cash.
Record the sale of the machine for $34,000 cash.
4. Diaz sold the machine for $40,900 cash.
Record the sale of the machine for $40,900 cash.

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Answer from: cheriebg

See the explanation.

Explanation:

Requirement 1

Accumulated depreciation Debit $94,600

Loss on sale of machine Debit $31,400

Machine Credit $126,000

Note: To record the disposal of the machine. As the company did not receive anything after selling the machine, therefore, the company sold the machine at a loss of = $126,000(Cost) - $94,600(Accumulated depreciation) = $31,400.

Requirement 2

Cash Debit $17,500

Accumulated depreciation Debit $94,600

Loss on sale of machine Debit $13,900

Machine Credit $126,000

Note: To record the disposal of the machine. The company sold the machine for 17,500 cash after selling the machine. However, the company still faced a loss of = $126,000(Cost) - $94,600(Accumulated depreciation) - $17,500(Cash) = $13,900.

Requirement 3

Cash Debit $34,000

Accumulated depreciation Debit $94,600

Gain on sale of machine Credit $2,600

Machine Credit $126,000

Note: To record the disposal of the machine. The company sold the machine for $34,000 cash after selling the machine. In this case the company make a profit after selling the machine = $94,600(Accumulated depreciation) + $34,000(Cash) - $126,000(Cost) = $2,600.

Requirement 4

Cash Debit $40,900

Accumulated depreciation Debit $94,600

Gain on sale of machine Credit $9,500

Machine Credit $126,000

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Diaz Company owns a machine that cost $126,000 and has accumulated depreciation of $94,600. Prepare...

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