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Rayya Co. purchases a machine for $117,600 on January 1, 2019. Straight-line depreciation is taken each...

Rayya Co. purchases a machine for $117,600 on January 1, 2019. Straight-line depreciation is taken each year for four years assuming a seven-year life and no salvage value. The machine is sold on July 1, 2023, during its fifth year of service.
  
Prepare entries to record the partial year’s depreciation on July 1, 2023, and to record the sale under each separate situation. (1) The machine is sold for $50,400 cash. (2) The machine is sold for $40,320 cash.

  • Record the depreciation expense as of July 1, 2023.

Note: Enter debits before credits.
Date General Journal Debit Credit
July 01, 2023
  • Record the sale of the machinery for $50,400 cash.

Note: Enter debits before credits.
Date General Journal Debit Credit
July 01, 2023
  • Record the machine sold for $40,320 cash.

Note: Enter debits before credits.
Date General Journal Debit Credit
July 01, 2023
Business   Accounting   
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Homework Answers

Answer #1

a) Journal entry

Date account and explanation Debit Credit
July 1,2023 Depreciation expense (117600/7)*6/12 8400
Accumulated depreciation-Machine 8400

b) Journal entry

Date account and explanation Debit Credit
July 1,2023 Cash 50400
Accumulated depreciation-Machine (117600/7*4.5) 75600
Gain on sale of machine 8400
Machine 117600

c) Journal entry

Date account and explanation Debit Credit
July 1,2023 Cash 40320
Accumulated depreciation-Machine (117600/7*4.5) 75600
Loss on sale of machine 1680
Machine 117600
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