Question

Recording Fixed Asset Disposal On April 1, 2020, one of the two large production machines used...

Recording Fixed Asset Disposal

On April 1, 2020, one of the two large production machines used by Evert Company stripped a gear, causing major internal damage. On April 5, 2020, the company decided to purchase a new machine (cost of $547,500) so that production could continue. On January 1, the accounts showed the following for the old machine: original cost, $270,000; accumulated depreciation, $189,000 (20-year life; no residual value). The company did not accept a trade-in offer of $40,500. Instead, the old machine was sold on April 5 to another company for $72,000. Evert spent $9,000 cleaning and $3,000 moving the machine prior to shipping. Insurance premiums (prepaid) on the old machine were $1,350; the unused portion of the premium is applied to the new machine. That insurance was paid on January 1 and covered the period January 1 through December 31.

a. Record the entry for Evert Company to purchase equipment on April 5, 2020.

Date Account Name Dr. Cr.
April 5, 2020 AnswerCashPrepaid InsuranceEquipmentBuildingLandConstruction in ProcessAccumulated          DepreciationAccounts PayableProperty Tax PayableAsset Retirement ObligationNote PayableDiscount on Note          PayableCommon StockPaid-in Capital in Excess of Par—Common StockContribution RevenueGain on Asset          ExchangeAccretion ExpenseDepreciation ExpenseInsurance ExpenseInterest ExpenseRepair ExpenseLoss on          Asset ExchangeLoss on Asset ReplacementLoss on Construction of BuildingLoss on DisposalLoss on Settlement          of Asset Retirement ObligationN/A Answer Answer
AnswerCashPrepaid InsuranceEquipmentBuildingLandConstruction in ProcessAccumulated          DepreciationAccounts PayableProperty Tax PayableAsset Retirement ObligationNote PayableDiscount on Note          PayableCommon StockPaid-in Capital in Excess of Par—Common StockContribution RevenueGain on Asset          ExchangeAccretion ExpenseDepreciation ExpenseInsurance ExpenseInterest ExpenseRepair ExpenseLoss on          Asset ExchangeLoss on Asset ReplacementLoss on Construction of BuildingLoss on DisposalLoss on Settlement          of Asset Retirement ObligationN/A Answer Answer


b. Record the entries for Evert Company on April 5, 2020, to dispose of the old machine, including any required updates for depreciation and for insurance expense.
Note: Round your answers to the nearest whole number.
Note: Record debit accounts in alphabetical order using the first letter of the account name.

Date Account Name Dr. Cr.
April 5, 2020 AnswerCashPrepaid InsuranceEquipmentBuildingLandConstruction in ProcessAccumulated          DepreciationAccounts PayableProperty Tax PayableAsset Retirement ObligationNote PayableDiscount on Note          PayableCommon StockPaid-in Capital in Excess of Par—Common StockContribution RevenueGain on Asset          ExchangeAccretion ExpenseDepreciation ExpenseInsurance ExpenseInterest ExpenseRepair ExpenseLoss on          Asset ExchangeLoss on Asset ReplacementLoss on Construction of BuildingLoss on DisposalLoss on Settlement          of Asset Retirement ObligationN/A Answer Answer
AnswerCashPrepaid InsuranceEquipmentBuildingLandConstruction in ProcessAccumulated          DepreciationAccounts PayableProperty Tax PayableAsset Retirement ObligationNote PayableDiscount on Note          PayableCommon StockPaid-in Capital in Excess of Par—Common StockContribution RevenueGain on Asset          ExchangeAccretion ExpenseDepreciation ExpenseInsurance ExpenseInterest ExpenseRepair ExpenseLoss on          Asset ExchangeLoss on Asset ReplacementLoss on Construction of BuildingLoss on DisposalLoss on Settlement          of Asset Retirement ObligationN/A Answer Answer
To update depreciation.
April 5, 2020 AnswerCashPrepaid InsuranceEquipmentBuildingLandConstruction in ProcessAccumulated             DepreciationAccounts PayableProperty Tax PayableAsset Retirement ObligationNote PayableDiscount on Note             PayableCommon StockPaid-in Capital in Excess of Par—Common StockContribution RevenueGain on Asset             ExchangeAccretion ExpenseDepreciation ExpenseInsurance ExpenseInterest ExpenseRepair ExpenseLoss on             Asset ExchangeLoss on Asset ReplacementLoss on Construction of BuildingLoss on DisposalLoss on Settlement             of Asset Retirement ObligationN/A Answer Answer
AnswerCashPrepaid InsuranceEquipmentBuildingLandConstruction in ProcessAccumulated             DepreciationAccounts PayableProperty Tax PayableAsset Retirement ObligationNote PayableDiscount on Note             PayableCommon StockPaid-in Capital in Excess of Par—Common StockContribution RevenueGain on Asset             ExchangeAccretion ExpenseDepreciation ExpenseInsurance ExpenseInterest ExpenseRepair ExpenseLoss on             Asset ExchangeLoss on Asset ReplacementLoss on Construction of BuildingLoss on DisposalLoss on Settlement             of Asset Retirement ObligationN/A Answer Answer
To record insurance.
April 5, 2020 AnswerCashPrepaid InsuranceEquipmentBuildingLandConstruction in ProcessAccumulated          DepreciationAccounts PayableProperty Tax PayableAsset Retirement ObligationNote PayableDiscount on Note          PayableCommon StockPaid-in Capital in Excess of Par—Common StockContribution RevenueGain on Asset          ExchangeAccretion ExpenseDepreciation ExpenseInsurance ExpenseInterest ExpenseRepair ExpenseLoss on          Asset ExchangeLoss on Asset ReplacementLoss on Construction of BuildingLoss on DisposalLoss on Settlement          of Asset Retirement ObligationN/A Answer Answer
AnswerCashPrepaid InsuranceEquipmentBuildingLandConstruction in ProcessAccumulated          DepreciationAccounts PayableProperty Tax PayableAsset Retirement ObligationNote PayableDiscount on Note          PayableCommon StockPaid-in Capital in Excess of Par—Common StockContribution RevenueGain on Asset          ExchangeAccretion ExpenseDepreciation ExpenseInsurance ExpenseInterest ExpenseRepair ExpenseLoss on          Asset ExchangeLoss on Asset ReplacementLoss on Construction of BuildingLoss on DisposalLoss on Settlement          of Asset Retirement ObligationN/A Answer Answer
AnswerCashPrepaid InsuranceEquipmentBuildingLandConstruction in ProcessAccumulated          DepreciationAccounts PayableProperty Tax PayableAsset Retirement ObligationNote PayableDiscount on Note          PayableCommon StockPaid-in Capital in Excess of Par—Common StockContribution RevenueGain on Asset          ExchangeAccretion ExpenseDepreciation ExpenseInsurance ExpenseInterest ExpenseRepair ExpenseLoss on          Asset ExchangeLoss on Asset ReplacementLoss on Construction of BuildingLoss on DisposalLoss on Settlement          of Asset Retirement ObligationN/A Answer Answer
AnswerCashPrepaid InsuranceEquipmentBuildingLandConstruction in ProcessAccumulated          DepreciationAccounts PayableProperty Tax PayableAsset Retirement ObligationNote PayableDiscount on Note          PayableCommon StockPaid-in Capital in Excess of Par—Common StockContribution RevenueGain on Asset          ExchangeAccretion ExpenseDepreciation ExpenseInsurance ExpenseInterest ExpenseRepair ExpenseLoss on          Asset ExchangeLoss on Asset ReplacementLoss on Construction of BuildingLoss on DisposalLoss on Settlement          of Asset Retirement ObligationN/A Answer Answer
To record disposal.
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