Exercise 10-17 Partial-year depreciation; disposal of plant asset LO P2

Rayya Co. purchases and installs a machine on January 1, 2017, at a total cost of $176,400. Straight-line depreciation is taken each year for four years assuming a eight-year life and no salvage value. The machine is disposed of on July 1, 2021, during its fifth year of service. Prepare entries to record the partial years depreciation on July 1, 2021, and to record the disposal under the following separate assumptions: (1) The machine is sold for $88,200 cash. (2) An insurance settlement of $74,088 is received due to the machines total destruction in a fire.

Credit No 1 Date July 01, 2021 General Journal Depreciation expense Accumulated depreciation-Machinery Debit 12,600 12,600 2 July 01, 2021 Cash Accumulated depreciation-Machinery 3 July 01, 2021 Cash Accumulated depreciationMachinery Loss from fire Machinery