Gandalf Co. purchased and installed a machine on January 1, 2014, at a total cost of $296,800. Straight-line depreciation was taken each year for four years, based on the assumption of a seven-year life and no residual value. The machine was disposed of on July 1, 2018, during its fifth year of service. Gandalf’s year-end is December 31.

Required

Present the entries to record the partial year’s depreciation on July 1, 2018, and to record the disposal under each of the following unrelated assumptions:

a. The machine was sold for $112,000 cash.

b. Gandalf received an insurance settlement of $96,000 resulting from the total destruction of the machine in a fire.