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Why are my journal entries incorrect? What would they be? On December 31, 2020, Shamrock Inc. has a machine with a book value of $1,015,200.
Why are my journal entries incorrect? What would they be?
On December 31, 2020, Shamrock Inc. has a machine with a book value of $1,015,200. The original cost and related accumulated depreciation at this date are as follows. Machine Less: Accumulated depreciation Book value $1,404,000 388,800 $1,015,200 Depreciation is computed at $64,800 per year on a straight-line basis. Presented below is a set of independent situations. For each independent situation, indicate the journal entry to be made to record the transaction. Make sure that depreciation entries are made to update the book value of the machine prior to its disposal. (a) Your answer is partially correct. A fire completely destroys the machine on August 31, 2021. An insurance settlement of $464,400 was received for this casualty. Assume the settlement was received immediately. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Date Account Titles and Explanation Debit Credit August 31, 2021 Depreciation Expense 43200 Accumulated Depreciation Machinery 43 (To record current depreciation.) August 31, 2021 Cash 464400 Accumulated Depreciation Machinery 432000 Loss on Disposal of Machinery 507600 Machinery 1404 (To record loss of the machine.) (b) Your answer is partially correct. On April 1, 2021, Shamrock sold the machine for $1,123,200 to Yoakam Company. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Date Account Titles and Explanation Debit Credit ril 1, 2021 Depreciation Expense 16200 Accumulated Depreciation-Machinery 16200 (To record current depreciation.) ril 1, 2021 Cash 1123200 Accumulated Depreciation-Machinery 405000 Gain on Disposal of Machinery 124200 Machinery 1404000 (To record sale of the machine.) (c) Your answer is partially correct. On July 31, 2021, the company donated this machine to the Mountain King City Council. The fair value of the machine at the time of the donation was estimated to be $1,188,000. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts.) Date Debit Credit Account Titles and Explanation Depreciation Expense 31, 2021 37800 Accumulated Depreciation-Machinery 37800 (To record current depreciation.) 131, 2021 Accumulated Depreciation Machinery 426600 Cash 1188000 Gain on Disposal of Buildings 210600 Machinery 1404000 (To record donation of the machine.)Step by Step Solution
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