Question

During 2015, Callaway Company disposed of three different assets. On January 1, 2015, prior to the disposal of the assets, the accounts reflected the following:
The machines were disposed of in the following ways:
a. Machine A: Sold on January 1, 2015, for $ 6,250 cash.
b. Machine B: Sold on July 1, 2015, for $ 9,500; received cash, $ 4,500, and a $ 5,000 interest- bearing (10 percent) note receivable due at the end of 12 months.
c. Machine C: Suffered irreparable damage from an accident on October 2, 2015. On October 10, 2015, a salvage company removed the machine immediately at a cost of $ 500. The machine was insured, and $ 11,500 cash was collected from the insurance company.
Required:
1. Prepare all journal entries related to the disposal of each machine.
2. Explain the accounting rationale for the way that you recorded each disposal.


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  • CreatedAugust 04, 2015
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