Recording and Interpreting the Disposal of Three Long-Lived Assets

During 2018, Cote Company disposed of three different assets. On January 1, 2018, prior to the disposal of the assets, the accounts reflected the following:

Asset Original Cost Residual Value Estimated Life Accumulated Depreciation(straight line)

Machine A $20000 $2000 8 years $13500 (6 years)

Machine B 41000 4000 10 years 29600 (8 years)

Machine C 75000 3000 12 years 60000 (10 years)

The machines were disposed of in the following ways:

a. Machine A: sold on January 1, 2018, for $7200 cash

b. Machine B: Sold on April 1, 2018, for $8500; received cash, $2500, and a note receivable for $6000, due on March 31, 2016, plus 6 percent interest

c. Machine C: Suffered irreparable damage from an accident on July 2, 2018. On July 10, 2018, a salvage company removed the machine immediately at no cost. The machine was insured, and $18000 cash was collected from the insurance company

Required:

1. Prepare all journal entries related to the disposal of each machine in 2018
2. Explain the accounting rationale for the way that you recorded each disposal