During the current year, Fortini Company disposed of three different assets. The company's accounts reflected the following on January 1 of the current years, prior to the disposal of the assets: Estimated Life Accumulated Depreciation Original Residual Asset Machine A Machine B Machine C Cost $21,000 50,000 75,000 Value $3,000 4,000 3,000 8 years 10 years 12 years (straight line) $15,750 (7 years) 36,800 (8 years) 60,000 (10 years) The machines were disposed of in the following ways: a. Machine A: Sold on January 1 of the current year for $5,000 cash. b. Machine B: Sold on April 1 for $10,500; received cash, $2,500, and a note receivable for $8,000, due on March 31 of the following year, plus 6 percent interest. c. Machine C: Suffered irreparable damage from an accident on July 2. On July 10, a salvage company removed the machine at no cost. The machine was insured, and $18,000 cash was collected from the insurance company. Required: 1. Prepare all journal entries related to the disposal of each machine in the current year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round the final answer to nearest whole dollar.) View transaction list View journal entry worksheet 1 Record depreciation expense of machine A. 2 Record disposal of machine A. ③ Record depreciation expense of machine B. 4 Record disposal of machine B. 5 Record depreciation expense of machine C. 6 Record disposal of machine C. E☑ Debit Credit
During the current year, Fortini Company disposed of three different assets. The company's accounts reflected the following on January 1 of the current years, prior to the disposal of the assets: Estimated Life Accumulated Depreciation Original Residual Asset Machine A Machine B Machine C Cost $21,000 50,000 75,000 Value $3,000 4,000 3,000 8 years 10 years 12 years (straight line) $15,750 (7 years) 36,800 (8 years) 60,000 (10 years) The machines were disposed of in the following ways: a. Machine A: Sold on January 1 of the current year for $5,000 cash. b. Machine B: Sold on April 1 for $10,500; received cash, $2,500, and a note receivable for $8,000, due on March 31 of the following year, plus 6 percent interest. c. Machine C: Suffered irreparable damage from an accident on July 2. On July 10, a salvage company removed the machine at no cost. The machine was insured, and $18,000 cash was collected from the insurance company. Required: 1. Prepare all journal entries related to the disposal of each machine in the current year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round the final answer to nearest whole dollar.) View transaction list View journal entry worksheet 1 Record depreciation expense of machine A. 2 Record disposal of machine A. ③ Record depreciation expense of machine B. 4 Record disposal of machine B. 5 Record depreciation expense of machine C. 6 Record disposal of machine C. E☑ Debit Credit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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Transcribed Image Text:During the current year, Fortini Company disposed of three different assets. The company's accounts reflected the following on
January 1 of the current years, prior to the disposal of the assets:
Estimated
Life
Accumulated Depreciation
(straight line)
$15,750 (7 years)
Original Residual
Asset
Machine A
Machine B
Machine C
Cost
Value
$21,000
$3,000
8 years
50,000
4,000
75,000
3,000
10 years
12 years
60,000 (10 years)
36,800 (8 years)
The machines were disposed of in the following ways:
a. Machine A: Sold on January 1 of the current year for $5,000 cash.
b. Machine B: Sold on April 1 for $10,500; received cash, $2,500, and a note receivable for $8,000, due on March 31 of the following
year, plus 6 percent interest.
c. Machine C: Suffered irreparable damage from an accident on July 2. On July 10, a salvage company removed the machine at no
cost. The machine was insured, and $18,000 cash was collected from the insurance company.
Required:
1. Prepare all journal entries related to the disposal of each machine in the current year. (If no entry is required for a
transaction/event, select "No journal entry required" in the first account field. Round the final answer to nearest whole dollar.)
View transaction list View journal entry worksheet
1 Record depreciation expense of machine A.
2
Record disposal of machine A.
3 Record depreciation expense of machine B.
4
Record disposal of machine B.
5 Record depreciation expense of machine C.
6
Record disposal of machine C.
☑
Debit
Credit
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