Business, 14.04.2020 23:24 asia5291

On December 31, 2017, Travis Tritt Inc. has a machine with a book value of $940,000. The original cost and related accumulated depreciation at this date are as follows.

Machine
$1,300,000

Less: Accumulated depreciation
360,000

Book value
$940,000

Depreciation is computed at $60,000 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.

A) A fire completely destroys the machine on August 31, 2018. An insurance settlement of $430,000 was received for this casualty. Assume the settlement was received immediately.

b) On April 1, 2018, Tritt sold the machine for $1,040,000 to Dwight Yoakam Company.

(c) On July 31, 2018, the company donated this machine to the Mountain King City Council. The fair market value of the machine at the time of the donation was estimated to be $1,100,000.

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Answer from: erin5678

journal entry to be made to record the transaction.

Part A. August 31, 2018

Depreciation $40,000 (debit)

Accumulated Depreciation $40,000 (credit)

Cash - Insurance Compensation $430,000 (debit)

Accumulated Depreciation $ 400,000 (debit)

Loss on Compensation $470,000 (debit)

Machine$1,300,000 (credit)

Part B. April 1, 2018

Depreciation $15,000 (debit)

Accumulated Depreciation $15,000 (credit)

Cash $1,040,000 (debit)

Accumulated Depreciation $ 375,000 (debit)

Profit on Sale of Machine $115,000 (debit)

Machine$1,300,000 (credit)

Part C. July 31, 2018

Depreciation $35,000 (debit)

Accumulated Depreciation $35,000 (credit)

Donation $1,100,000 (debit)

Accumulated Depreciation $ 395,000 (debit)

Loss on Disposal of Machine$195,000 (debit)

Machine$1,300,000 (credit)

Explanation:

Part A. August 31, 2018

Depreciation Charge = $60,000 × 8/12

= $40,000

Depreciation $40,000 (debit)

Accumulated Depreciation $40,000 (credit)

Cash - Insurance Compensation $430,000 (debit)

Accumulated Depreciation $ 400,000 (debit)

Loss on Compensation $470,000 (debit)

Machine$1,300,000 (credit)

Part B. April 1, 2018

Depreciation Charge = $60,000 × 3/12

= $15,000

Depreciation $15,000 (debit)

Accumulated Depreciation $15,000 (credit)

Cash $1,040,000 (debit)

Accumulated Depreciation $ 375,000 (debit)

Profit on Sale of Machine $115,000 (debit)

Machine$1,300,000 (credit)

Part C. July 31, 2018

Depreciation Charge = $60,000 × 7/12

= $35,000

Depreciation $35,000 (debit)

Accumulated Depreciation $35,000 (credit)

Donation $1,100,000 (debit)

Accumulated Depreciation $ 395,000 (debit)

Loss on Disposal of Machine$195,000 (debit)

Machine$1,300,000 (credit)

Answer from: Quest

answer; possession utility;

Answer from: Quest

if you use only 25 for your entertainment and only 200 for the groceries that you really need and take out the 50 per month for the computer then that should be enough

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On December 31, 2017, Travis Tritt Inc. has a machine with a book value of $940,000. The original co...

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