Pacifica Manufacturing retired a computerized metal stamping machine on December 31, 2019. Pacifica sold the machine to another company and did not replace it. The following data are available for the machine:
Cost (installed), 1/1/2014 ........................................... $880,000
Residual value estimated on 1/1/2014 ............................... 60,000
Estimated life as of 1/1/2014 ....................................... 10 years
The machine was sold for $225,000 cash. Pacifica uses the straight-line method of depreciation.
Required:
1. Prepare the journal entry to record depreciation expense for 2019.
2. Compute accumulated depreciation at December 31, 2019.
3. Prepare the journal entry to record the sale of the machine.
4. Explain how the disposal of the fixed asset would affect the 2019 financial statements. Ignore income taxes?