Question

On January 2, Bering Co. disposes of a machine costing $59,300 with accumulated depreciation of $31,944....

On January 2, Bering Co. disposes of a machine costing $59,300 with accumulated depreciation of $31,944. Prepare the entries to record the disposal under each separate situation.

  1. The machine is sold for $22,943 cash.
  2. The machine is traded in for a new machine having a $75,800 cash price. A $28,238 trade-in allowance is received, and the balance is paid in cash. Assume the asset exchange has commercial substance.
  3. The machine is traded in for a new machine having a $75,800 cash price. A $21,179 trade-in allowance is received, and the balance is paid in cash. Assume the asset exchange has commercial substance
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Answer #1
Journal entries
S.no. Accounts title and explanations Debit $ Credit $
a. Cash 22943
Accumulated dep 31944
Loss on sale of Equipment 4413
    Equipment 59300
(for sale of equipment)
b. Machine equipment (New) 75800
Accumulated dep 31944
    Cash 47562
    Equipment 59300
    Gain on sale of assets (28238-27356) 882
(for exchange of assets)
c. Machine equipment (New) 75800
Accumulated dep 31944
Loss on sale of equipment (27356-21179) 6177
    Cash 54621
    Equipment 59300
(for exchange of assets)
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