accounting question
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question_6.doc|
On December 31, 2017, Waterway Inc. has a machine with a book value of $1,128,000. The original cost and related accumulated depreciation at this date are as follows. Machine $1,560,000 Less: Accumulated depreciation 432,000 Book value $1,128,000 Depreciation is computed at $72,000 per year on a straight-line basis. Presented below is a set of independent situations. For each independent situation, indicate the journal entry to be made to record the transaction. Make sure that depreciation entries are made to update the book value of the machine prior to its disposal. |
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A fire completely destroys the machine on August 31, 2018. An insurance settlement of $516,000 was received for this casualty. Assume the settlement was received immediately. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit August 31, 2018
(To record current depreciation.) August 31, 2018
(To record loss of the machine.)
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On April 1, 2018, Waterway sold the machine for $1,248,000 to Dwight Yoakam Company. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit April 1, 2018
(To record current depreciation.) April 1, 2018
(To record sale of the machine.)
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On July 31, 2018, the company donated this machine to the Mountain King City Council. The fair value of the machine at the time of the donation was estimated to be $1,320,000. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit July 31, 2018
(To record current depreciation.) July 31, 2018
(To record donation of the machine.) Click if you would like to Show Work for this question:
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