During 2010, Kosik Company disposed of three different assets. On January 1, 2010, prior to their disposal, the accounts reflected the following:

The machines were disposed of in the following ways:
a. Machine A: Sold on January 1, 2010, for $5,750 cash.
b. Machine B: Sold on December 31, 2010, for $9,000; received cash, $4,000, and a $5,000 interest-bearing (10 percent) note receivable due at the end of 12 months.
c. Machine C: On January 1, 2010, this machine suffered irreparable damage from an accident and was scrapped.

Required:
1. Give all journal entries related to the disposal of each machine.
2. Explain the accounting rationale for the way that you recorded eachdisposal.

Transcribed Image Text:

Original Cost $24.000 16,500 59,200 Residual Value $2,000 5,000 3,200 Accumulated Depreciation (straight line) $17.600 (4 years) 8,050 (7 years) 48,000 (12 years) Estimated Life Asset Machine A Machine B Machine C 5 years 10 years 14 years