During 2011, Rank Company disposed of three different assets. On January 1, 2011, 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, 2011, for $6,750 cash.
b. Machine B: Sold on December 31, 2011, for $7,000; received cash, $2,000, and a $5,000 interest bearing (10 percent) note receivable due at the end of 12 months.
c. Machine C: On January 1, 2011, 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 in which you recorded eachdisposal.

Transcribed Image Text:

Accumulated Depreciation (straight line) $17,600 (4 years) 8,050 (7 years) 48,000 (12 years) Original Cost Residual Value Estimated Asset Machine A Machine B Machine C Life 5 years 10 years 14 years $2,000 $24,000 16,500 59,200 5,000