Question
JacobCO Inc. manufactures PVC waterpipe in a variety of different sizes. It uses different sizes of extruders to make the pipe. The company has a
JacobCO Inc. manufactures PVC waterpipe in a variety of different sizes. It uses different sizes of extruders to make the pipe. The company has a 3 extruder that it had bought 8 years ago for $175,000. It had a 10 year physical life with an estimated salvage value of $30,000 at the end of that time period. The company wants to make a new line of larger PVC water pipes and it needs to replace the 3 extruder with a new 5 extruder. The company uses straight line depreciation and the depreciation on the 3 extruder is up to date at the end of year 8.
Required:
A. Assume that the company sold the 3 extruder for $60,500 at the end of year 8. Make the required journal entries to record the transaction.
B. Assume that the company sold the 3 extruder for $22,000 at the end of year 8. Make the required journal entries to record the transaction.
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