During 2015 Callaway Company disposed of three different assets On
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.
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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