Hertzog Company Purchased and Installed a Machine on February 1,2019,at

question 102

Essay

Hertzog Company purchased and installed a machine on February 1,2019,at a total cost of $72,000.Straight-line depreciation was calculated based on the assumption of a five-year life and no residual value.The machine was disposed of on July 31,2022.Assuming the machine was sold for $22,000,prepare the general journal entry to record the disposal

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Definitions:

Disposable Income

The amount of income left for an individual or household after paying all taxes, available for spending, saving, or investing.

Autonomous Consumption

The level of consumption that occurs when income is zero, showing the basic level of consumption necessary for survival.

Permanent Income Hypothesis

A theory suggesting that people's consumption decisions are based on their long-term income expectations rather than their current disposable income.

Negative Savings

A situation where spending exceeds income, resulting in a deficit rather than savings.