P8-9 Recording and Interpreting the Disposal of Three Long-Lived Assets (AP8-7) 108-5 During the current year, Fortini Company disposed of three different assets. The company's accounts reflected the following on January 1 of the current years, prior to the disposal of the assets: Asset Original Cost Residual Value Estimated Life Machine A $21,000 $3,000 8 years 10 years Accumulated Depreciation (straight line) S15,750 ( 7 years) 36,800 (8 years) 60.000 (10 years) Machine B 50,000 4,000 Machine C 75,000 3,000 12 years The machines were disposed of in the following ways: a Machine A: Sold on January 1 of the current year for $5,000 cash. b. Machine B: Sold on April 1 for $10,500; received cash, $2,500, and a note receivable for $8,000, due on March 31 of the following year, plus 6 percent interest. c. Machine C: Suffered irreparable damage from an accident on July 2. On July 10, a salvage company removed the machine at no cost. The machine was insured, and $18,000 cash was collected from the insurance company. Required: 1. Prepare 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