Question

On December 31, 2017, Cullumber Inc. has a machine with a book value of $ 1,222,000....

On December 31, 2017, Cullumber Inc. has a machine with a book value of $ 1,222,000. The original cost and related accumulated depreciation at this date are as follows.

Machine

$ 1,690,000

Less: Accumulated depreciation

468,000

Book value

$ 1,222,000


Depreciation is computed at $ 78,000 per year on a straight-line basis.

Presented below is a set of independent situations. For each independent situation, indicate the journal entry to be made to record the transaction. Make sure that depreciation entries are made to update the book value of the machine prior to its disposal.

A fire completely destroys the machine on August 31, 2018. An insurance settlement of $ 559,000 was received for this casualty. Assume the settlement was received immediately. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

August 31, 2018

enter an account title to record current depreciation on August 31, 2018

enter a debit amount

enter a credit amount

enter an account title to record current depreciation on August 31, 2018

enter a debit amount

enter a credit amount

(To record current depreciation.)

August 31, 2018

enter an account title to record loss of the machine on August 31, 2018

enter a debit amount

enter a credit amount

enter an account title to record loss of the machine on August 31, 2018

enter a debit amount

enter a credit amount

enter an account title to record loss of the machine on August 31, 2018

enter a debit amount

enter a credit amount

enter an account title to record loss of the machine on August 31, 2018

enter a debit amount

enter a credit amount

(To record loss of the machine.)

On April 1, 2018, Cullumber sold the machine for $ 1,352,000 to Dwight Yoakam Company. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

April 1, 2018

enter an account title to record current depreciation on April 1, 2018

enter a debit amount

enter a credit amount

enter an account title to record current depreciation on April 1, 2018

enter a debit amount

enter a credit amount

(To record current depreciation.)

April 1, 2018

enter an account title to record sale of the machine on April 1, 2018

enter a debit amount

enter a credit amount

enter an account title to record sale of the machine on April 1, 2018

enter a debit amount

enter a credit amount

enter an account title to record sale of the machine on April 1, 2018

enter a debit amount

enter a credit amount

enter an account title to record sale of the machine on April 1, 2018

enter a debit amount

enter a credit amount

(To record sale of the machine.)

On July 31, 2018, the company donated this machine to the Mountain King City Council. The fair value of the machine at the time of the donation was estimated to be $ 1,430,000. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

July 31, 2018

enter an account title to record current depreciation on July 31, 2018

enter a debit amount

enter a credit amount

enter an account title to record current depreciation on July 31, 2018

enter a debit amount

enter a credit amount

(To record current depreciation.)

July 31, 2018

enter an account title to record donation of the machine on July 31, 2018

enter a debit amount

enter a credit amount

enter an account title to record donation of the machine on July 31, 2018

enter a debit amount

enter a credit amount

enter an account title to record donation of the machine on July 31, 2018

enter a debit amount

enter a credit amount

enter an account title to record donation of the machine on July 31, 2018

enter a debit amount

enter a credit amount

(To record donation of the machine.)

Homework Answers

Answer #1

JOURNAL   

date Particulars Debit Credit
31.Aug Depreciation(78000*8/12=52000) 52000
Accumulated Depreciation 52000
31.Aug Bank 559000
Accumulated Depreciation(468000+52000) 520000
Profit and Loss 611000
Machine 1690000
30 April Depreciation 19500
Accumulated Depreciation(78000*3/12) 19500
30 April Bank 1352000
Accumulated Depreciation(468000+19500) 487500
Profit and Loss 149500
Machine 1690000
31 july

Depreciation(78000*7/12=45500)

45500
Accumulated Depreciation 45500
31. july Donation 1430000
Accumulated Depreciation(468000+45500) 513500
Profit & loss 253500
Machine 1690000
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