P8-6 LO8-3, 8-5 Recording and Interpreting the Disposal of Three Long-Lived Assets (AP8-5) During the current year, Merkley Company disposed of three different assets. On January 1 of the current year, prior to the disposal of the assets, the accounts reflected the following: Accumulated Asset Original Cost Residual Value Estimated Life Depreciation (straight line) Machine A $21,000 $3,000 8 years $15,750 (7 years) Machine B 50,000 4,000 10 years 36,800 (8 years) Machine C 85,000 5,000 15 years 64,000 (12 years) The machines were disposed of during the current year in the following ways: a. Machine A: Sold on January 1 for $5,000 cash. b. Machine B: Sold on December 31 for $10,500; received cash, $2,500, and an $8,000 interest-bearing (12 percent) note receivable due at the end of 12 months. c. Machine C: On January 1, this machine suffered irreparable damage from an accident. On January 10, a salvage company removed the machine at no cost. Required: 1. Give all journal entries related to the disposal of each machine in the current year. 2. Explain the accounting rationale for the way that you recorded each disposal