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Indicate the journal entry to be made to record transaction

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Question

On December 31, 2017, Ayayai Inc. has a machine with a book value of $1,297,200. The original cost and related accumulated depreciation at this date are as follows.

Machine $1,794,000

Less: Accumulated depreciation 496,800

Book value $1,297,200

Depreciation is computed at $82,800 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.

A fire completely destroys the machine on August 31, 2018. An insurance settlement of $593,400 was received for this casualty. Assume the settlement was received immediately.

August 31, 2018 (To record current depreciation.)

August 31, 2018 (To record loss of the machine.)

2.On April 1, 2018, Ayayai sold the machine for $1,435,200 to Dwight Yoakam Company.

April 1, 2018 (To record current depreciation.)

April 1, 2018 (To record loss of the machine.)

3.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 $1,518,000

July 31, 2018 (To record current depreciation.)

July 31, 2018 (To record loss of the machine.)

Reference no: EM132316615

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