Reference no: EM132974126

In 2020, Party House ceased operations at its trinket factory. The cessation was announced April 1, 2020 and operations ceased on October 31st of that year. Between January 1 and March 31, the trinket division had revenues of $1,000,000 and expenses of $450,000. From April 1 until October 31, the division had revenues of $2,200,000 and expenses of $2,400,000. All revenues and expenses were recorded and are included in the appropriate revenue and expense accounts in the 2020 trial balance. The factory was rented and paid up through Oct. 31. Machinery and equipment associated with the factory, with a book value of $1,400,000, will be sold next year. The fair value of that machinery and equipment is $842,000. The disposal of the division meets the criteria to be accounted for as a discontinued operation. The assets being disposed of meet the criteria to be considered held for sale assets. Assume a tax rate of 32%.

Problem 1: Prepare any journal entries relevant to the year 2020 for Party House. Party House has a calendar fiscal year.