Check my work Rayya Co. purchases and installs a machine on January 1, 2017, at
ID: 2407393 • Letter: C
Question
Check my work Rayya Co. purchases and installs a machine on January 1, 2017, at a total cost of $100,800 Straight-line depreciation is taken each year for four years assuming a seven-year life and no salvage value. The machine is disposed of on July 1, 2021, during its fifth year of service. Prepare entries to record the partial year's depreciation on July 1, 2021, and to record the disposal under the following separate assumptions: (1) The machine is sold for $43,200 cash. (2) An insurance settlement of $34,560 is received due to the machine's total destruction in a fire. ces Journal entry worksheet 2 Record the depreciation expense as of July 1, 2021. Note: Enter debits before credits.Explanation / Answer
Solution: 1. Date General Journal Debit Credit July 1, 2021 Depreciation expense 7,200 Accumulated depreciation-Machinery 7,200 Notes: [depreciation expense = (total cost/ life) x (month expired in 2021/12) ] [depreciation expense = (100,800/ 7) x (6/12) ] [depreciation expense = 7,200 ] 2. Date General Journal Debit Credit July 1, 2021 Cash 43,200 Accumulated depreciation-Machinery 64,800 Gain on sale of machinery 7,200 Machinery 100,800 Notes: Accumulated depreciation-Machinery till July 2021 = (cost /life) x life expired Accumulated depreciation-Machinery till July 2021 = (100,800/ 7) x 4.5 years Accumulated depreciation-Machinery till July 2021 = 14,400 x 4.5 years Accumulated depreciation-Machinery till July 2021 = 64,800 life expired = 1st January 2017 to 1st July 2021 = 4.5 years Gain on sale of machinery = cash received + Acc. Depre - cost Gain on sale of machinery = 43,200 + 64,800 - 100,800 Gain on sale of machinery = 7,200 3. Date General Journal Debit Credit July 1, 2021 Cash 34,560 Accumulated depreciation-Machinery 64,800 Loss from fire 1,440 Machinery 100,800 Notes: Accumulated depreciation-Machinery till July 2021 = (cost /life) x life expired Accumulated depreciation-Machinery till July 2021 = (100,800/ 7) x 4.5 years Accumulated depreciation-Machinery till July 2021 = 14,400 x 4.5 years Accumulated depreciation-Machinery till July 2021 = 64,800 life expired = 1st January 2017 to 1st July 2021 = 4.5 years Loss from fire= cost - cash received - Acc. Depre Loss from fire= 100,800 - 34,560 - 64,800 Loss from fire= 1,440 Please feel free to ask if anything about above solution in comment section of the question.