Question

Ly Company disposed of two different assets. On January 1, prior to their disposal, the accounts reflected the following:

Asset	Original Cost			Residual Value			Estimated Life		Accumulated Depreciation (straight-line)
Machine A	$	42,000		$	4,900		5	years	$	29,680	(4 years)
Machine B		78,200			5,600		15	years		58,080	(12 years)

The machines were disposed of in the following ways:

1. Machine A: Sold on January 1 for $13,000 cash.
2. Machine B: On January 1, this machine was sold to a salvage company at zero proceeds (and zero cost of removal).

Required:

1. 1. & 2. Prepare the 4 journal entries related to the disposal of Machine A and B at the beginning of the current year. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Answer 1

1.

date	general journal	debit	credit
	no entry is required

2.

date	general journal	debit	credit
Jan 1	cash a/c	13,000
	accumulated depreciation a/c	29,680
	.............To Machine A		42,000
	.............To gain on sale of machine A a/c		680

3.

date	general journal	debit	credit
	no entry required

4.

date	general journal	debit	credit
jan 1	Accumulated depreciation on machine B	58,080
	Loss on disposal of machine	20,120
	............To Machine B		78,200

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