Question
During the current year, Martinez Company disposed of two different assets. On January 1, prior to their disposal, the accounts reflected the following: Asset Original
During the current year, Martinez Company disposed of two different assets. On January 1, prior to their disposal, the accounts reflected the following:
Asset | Original Cost | Residual Value | Estimated Life | Accumulated Depreciation (straight-line) | |||||||
Machine A | $ | 77,700 | $ | 4,600 | 15 | years | $ | 63,353 | (13 years) | ||
Machine B | 21,500 | 2,300 | 8 | years | 14,400 | (6 years) | |||||
The machines were disposed of in the following ways:
- Machine A: Sold on January 2 for $21,500 cash.
- 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 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.)
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