PA9-2 (Algo) Recording and Interpreting the Disposal of Long-Lived Assets [LO 9-5]

Ly 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	$34,000	$3,700	5 years	$24,240	(4 years)
Machine B	66,200	4,600	14 years	$48,400	(11 years)

The machines were disposed of in the following ways:

Machine A: Sold on January 1 for $10,200 cash.

Machine B: On January 1, this machine was scrapped with zero proceeds (and zero cost of removal).

Required:

1. & 2. Prepare the journal entries related to the disposal of Machine A and B at the beginning of the current year. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

1- Record the current year depreciation for Machine A prior to disposal.

2- Machine A: Sold on January 1 for $10,200 cash. Record the transaction.

3- Record the current year depreciation for Machine B prior to disposal.

4- Machine B: On January 1, this machine was scrapped with zero proceeds (and zero cost of removal). Record the transaction.