CP9-2 Recording and Interpreting the Disposal of Long-Lived Assets [LO 9-5]

During the current year. Martinez Company disposed of two different assets. On January 1, prior to their disposal, the accounts reflected the following :

Assets	Original cost	Residual value	Estimated life	Accumulated depreciation (straight-line)
Machine A	$77,200	$4,500	15 year	$63,007 (13 year)
Machine B	21,000	2,200	8 year	14,100 (6 year)

The machines were disposed of in the following ways:

a. Machine A: Sold on January 2 for $21,OOO cash.

b. Machine B: On January 2, this machine suffered irreparable damage from an accident and was removed immediately by a salvage company at no cost.

Required:

1 & 2 prepare the journal entries related to the disposal of Machine A and B on January 2 of the current year. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

TIP. When no cash is received on disposal, the loss on disposal will equal the book value of the asset at the time of disposal.

Transcribed Image Text:

View transaction list Journal entry worksheet < 1 2 Record the disposal of Machine A for $21,000 cash on January 2, 2014. Note: Enter debits before credits. Date Jan 02 Record entry General Journal Clear entry Debit Credit View general journal View transaction list Journal entry worksheet < 1 2 Record the disposal of Machine A for $21,000 cash on January 2, 2014. Note: Enter debits before credits. Date Jan 02 Record entry General Journal Clear entry Debit Credit View general journal

Answer rating: 100% (QA)

Disposal of machine A Journal entry Date General Journal Debit Credit Jan 2 C... View the full answer