Question

Exercise 10-24 (Part Level Submission) On December 31, 2017, Swifty Inc. has a machine with a book value of $1,334,800. The original cost and related accumulated depreciation at this date are as follows. Machine Less: Accumulated depreciation Book value $1,846,000 511,200 $1,334,800 Depreciation is computed at $85,200 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 Your answer is correct. A fire completely destroys the machine on August 31, 2018. An insurance settlement of $610,600 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 August 31, 2018 Depreciation Expense 56800 Accumulated Depreciation-Machinery 56800 To record current depreciation.) August 31, 2018 Cash 610600

Answer 1

Solution :-

Date	Account titles and explanation	Debit	Credit
July 31, 2018	Depreciation expense	$49,700
	Accumulated depreciation [ 85,200 * ( 7 months / 12 ) ]		$49,700
	( To record current depreciation )
July 31, 2018	Contribution expense	$1,562,000
	Accumulated depreciation [ $49,700 + $511,200 ]	$560,900
	Gain on disposal [ [ $1,562,000 + $560,900 ] - $1,846,000 ]		$276,900
	Machine		$1,846,000
	( To record donation of the machine )