A Company Purchased and Installed a Machine on January 1,2010,at

question 85

Essay

A company purchased and installed a machine on January 1,2010,at a total cost of $72,000.Straight-line depreciation was calculated based on the assumption of a five-year life and no salvage value.The machine was disposed of on July 1,2013.
a.Prepare the general journal entry to update depreciation to July 1,2013.
b.Prepare the general journal entry to record the disposal of the machine under each of these three independent situations:
(1) The machine was sold for $22,000 cash.
(2) The machine was sold for $15,000 cash.
(3) The machine was totally destroyed in a fire and the insurance company settled the claim for $18,000 cash.

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Definitions:

Forecast of Sales

An estimate of the future sales volume over a specific period, based on historical data, market analysis, and other factors.

Revenue

The income generated from normal business operations and includes discounts and deductions for returned merchandise.

Quarterly Cash Payments

Regular financial distributions made by a company to its shareholders every three months.

Shareholders

Individuals or entities that own shares in a corporation, giving them a claim on part of the company's assets and earnings.