On January 5, 2011, Holstrom Co. disposes of a machine costing $65,500 with accumulated depreciation of $35,284. Prepare the entries to record the disposal under each of the following separate assumptions.
1. The machine is sold for $25,343 cash.
2. The machine is traded in for a newer machine having an $86,125 cash price. A $31,912 trade-in allowance is received, and the balance is paid in cash. Assume the asset exchange lacks commercial substance.
3. The machine is traded in for a newer machine having an $86,125 cash price. A $23,393 trade-in allowance is received, and the balance is paid in cash. Assume the asset exchange has commercial substance.