The foiowing information applies to the questions displayed below During the cur
ID: 2342734 • Letter: T
Question
The foiowing information applies to the questions displayed below During the current year, Merkley Company disposed of three different awsets. On January 1 of the currernt 1 of the current year prior to their disposal the accounts reflected the following Onginal Cost Depreciation (straight line) 25,000(10 years) 36750 (6 year 8,776 (12 years) Residual Estmated Life Asset Machine A Machine 8 Machine C 33000 $3,000 12 years 4,000 8 years 53,000 75,300 6200 17 years The machines were disposed of in the following ways a Machine A Sold on January 1 for $7600 cash. b Machine B Sold on December 31 for $10.625, received cash. S2.300, and ‘ S8325 interest-bearing (12 percent) note receivable due at the end of 12 months. c. Machine C On January t this machine suffered reparabe damae from an accident On January 1o. a salvege company removed the machine at no cost.Explanation / Answer
Machine A: 1 Cash 7600 Accumulated depreciation,Machine A 25000 Loss on disposal of machine 400 Equipment (Machine A) 33000 Machine B: 1 Depreciation expense 6125 =(53000-4000)/8 Accumulated depreciation,Machine B 6125 2 Cash 2300 Notes receivable 8325 Accumulated depreciation,Machine B 42875 =36750+6125 Equipment (Machine B) 53000 Gain on disposal of machine 500 Machine C: 1 Accumulated depreciation,Machine C 48776 Loss on disposal of machine 26524 Equipment (Machine C) 75300