A company purchased and installed machinery on January 1 at a total cost of $93,000. Straight-line depreciation was calculated based on the assumption of a five-year life and no salvage value. The machinery was disposed of on July 1 of year four. The company uses the calendar year.1. Prepare the general journal entry to update depreciation to July 1 in year four.2. Prepare the general journal entry to record the sale of the machine for $27,000 cash.
What will be an ideal response?
| 1. | July 1 | Depreciation expense - Machinery | 9,300 | ? |
| ? | ? | Accumulated depreciation - Machinery | ? | 9,300 |
| ? | ? | $93,000/5 x 6/12 = $9,300 | ? | ? |
| ? | ? | ? | ? | ? |
| 2a. | July 1 | Cash | 27,000 | ? |
| ? | ? | Accumulated depreciation - Machinery* | 65,100 | ? |
| ? | ? | Loss on Disposal of Asset | 900 | ? |
| ? | ? | Machinery | ? | 93,000 |
| ? | * ($93,000/5) × 3 ½ years = $65,100 | ? |
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