Question

During the current year, Martinez Company disposed of two different assets. On January 1, prior to their disposal, the accounts reflected the following: Accumulated Depreciation (straight-line) $63,613 (13 years) 14,700 (6 years) Estimated Life Original Cost Residual Value $4,800 2,400 Asset Machine A Machine B $78,200 22,000 15 years 8 years The machines were disposed of in the following ways: a. Machine A: Sold on January 2 for $22,000 cash b. Machine B: On January 2, this machine was sold to a salvage company at zero proceeds (and zero cost of removal). Required: 1. & 2. Prepare the journal entries related to the disposal of Machine A and B on the January 2 of the current year. TIP: When no cash is received on disposal, the loss on disposal will equal the book value of the asset at the time of disposal. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list 1 Record the disposal of Machine A for $22,000 cash on January 2, 2014 4. Record the disposal of Machine B due to irreparable damage from an accident. 2 X

Answer 1

1) Journal entry

Date	account and explanation	Debit	Credit
Jan 2	Cash	22000
	Accumulated depreciation-Machine A	63613
	Gain on sale of Machine A		7413
	Machine A		78200
	(To record disposal of Machine A)

2) Journal entry

Date	account and explanation	Debit	Credit
Jan 2	Accumulated depreciation-Machine B	14700
	Loss on sale of Machine B	7300
	Machine B		22000
	(To record disposal of Machine B)