Beauty Company uses straight-line depreciation for a partial year rounded to the nearest whole month. On 3 September 2022, Beauty purchased a machine at a cost of $150,000. The useful life of this machine is 5 years with a residual value of $30,000. Assume Beauty adjusts its accounts annually and the year-end date is 31 December. On 2 May 2024, Beauty sold the machine to Lucky Company for $115,000. Lucky paid Beauty in cash $15,000 on the same date and promised to pay the rest by the end of July 2024. Required: (a) The "Machine" presented in the Statement of Financial Position of Beauty Company as at 31 December 2023 would be: Machine (Cost) Less: Accumulated Depreciation Machine (Book Value) (3 marks) (b) Prepare the journal entries to record depreciation for 2024 up to the date of sale. (4 marks) (c) Prepare the journal entries to record the disposal of the machine on 2 May 2024. (10 marks)

Beauty Company uses straight-line depreciation for a partial year rounded to the nearest whole month. On 3 September 2022, Beauty purchased a machine at a cost of $150,000. The useful life of this machine is 5 years with a residual value of $30,000. Assume Beauty adjusts its accounts annually and the year-end date is 31 December. On 2 May 2024, Beauty sold the machine to Lucky Company for $115,000. Lucky paid Beauty in cash $15,000 on the same date and promised to pay the rest by the end of July 2024. Required: (a) The "Machine" presented in the Statement of Financial Position of Beauty Company as at 31 December 2023 would be: Machine (Cost) Less: Accumulated Depreciation Machine (Book Value) (3 marks) (b) Prepare the journal entries to record depreciation for 2024 up to the date of sale. (4 marks) (c) Prepare the journal entries to record the disposal of the machine on 2 May 2024. (10 marks)

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 13PB: Montezuma Inc. purchases a delivery truck for $20,000. The truck has a salvage value of $8,000 and...

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