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23 April, 12:44

On January 2, Bering Co. disposes of a machine costing $40,400 with accumulated depreciation of $21,763. Prepare the entries to record the disposal under each separate situation. The machine is sold for $15,631 cash. The machine is traded in for a new machine having a $56,900 cash price. A $19,238 trade-in allowance is received, and the balance is paid in cash. Assume the asset exchange has commercial substance. The machine is traded in for a new machine having a $56,900 cash price. A $14,429 trade-in allowance is received, and the balance is paid in cash. Assume the asset exchange has commercial substance.

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  1. 23 April, 15:45
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    1. Cash Dr. $15,631

    Accumulated depreciation Dr.$21,763

    Loss on disposal (40,400-21,763-15,631) Dr.$3,006

    Machine Cr.$40,400

    2. Machine-New (56,900-19,238) Dr.$37,662

    Cash Dr.$19,238

    Accumulated Depreciation Dr.$21,763

    Machine Old Cr.$40,400

    Cash (56,900-19,238) Cr.$37,662

    Gain on disposal (40,400-21,763-19238) Cr.$601

    3. New Machine (56,900-14,429) Dr.$42,471

    Cash Dr.$14,429

    Accumulated Depreciation Dr.$21,763

    Loss on disposal (40,400-21,763-14,429) Dr.$4,208

    Machine Old Cr.$40,400

    Cash Cr.$42,471
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