On January 1, 2006, Landers Company purchased ten washing machines to be used in its coin operated laundry Each washer cost $800 and was expected to have an $80 salvage value at the end of its four year useful life On September 30, 2009, Landers decided to purchase more efcient machines and sold th...

Cost Salvage Value Depreciable Amount Useful Life years 8000 800 7200 ...

On January 1, 2006, Landers Company purchased ten washing machines to be used in its coin operated

Question:

On January 1, 2006, Landers Company purchased ten washing machines to be used in its coin operated laundry. Each washer cost $800 and was expected to have an $80 at the end of its four-year useful life. On September 30, 2009, Landers decided to purchase more efﬁcient machines and sold the ten washers for $1,630. Landers uses straight-line depreciation for PP&E assets and records depreciation expense at the end of each year.
Required:
(a) Prepare the appropriate journal entry to record depreciation expense on the washers prior to their disposal. What is the book value of each washer following the posting of this journal entry?
(b) Determine the gain or loss on the sale of the washers. Prepare the journal entry to record the sale of the washers.
(c) Suppose that, rather than being sold, the washers were simply hauled to the junkyard. Prepare the journal entry to record the disposal of the washers.
Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...