Bridgeport Company has an old factory machine that cost $43,000. The machine has accumulated depreciation of $24,080. Bridgeport has decided to sell the machine. (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 0 for the amounts.) (a) What entry would Bridgeport make to record the sale of the machine for $21,080 cash? (b) What entry would Bridgeport make to record the sale of the machine for $11,080 cash?

Question

Business

Hudson Melton

26 February, 23:35

Bridgeport Company has an old factory machine that cost $43,000. The machine has accumulated depreciation of $24,080. Bridgeport has decided to sell the machine. (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 0 for the amounts.) (a) What entry would Bridgeport make to record the sale of the machine for $21,080 cash? (b) What entry would Bridgeport make to record the sale of the machine for $11,080 cash?

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Answers (1)

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Margaret Chase · Answer 1

a.

Cash $21080 Dr

Accumulated Depreciation-Machine $24080 Dr

Gain on Disposal $2160 Cr

Machine account $43000 Cr

b.

Cash $11080 Dr

Accumulated Depreciation-Machine $24080 Dr

Loss on Disposal $7840 Dr

Machine account $43000 Cr

Explanation:

The asset is being sold off by the company which will cause the business to write off the asset from the books and credit it. The accumulated depreciation is a contra asset account and it will be debited to close this account.

The carrying value of the asset = Cost - Accumulated Depreciation

Carrying value = 43000 - 24080 = $18920

If the sales proceeds is more than the carrying value there is a gain on disposal and vice versa.

a.

Gain/loss on disposal = 21080 - 18920 = $2160 gain

b.

Gain/loss on disposal = 11080 - 18920 = - $7840 loss