Prepare journal entries related to disposal of Machine A

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Question - Recording and Interpreting the Disposal of Long-Lived Assets - During the current year, Martinez Company disposed of two different assets. On January 1, prior to their disposal, the accounts reflected the following:

Asset

Original Cost

Residual Value

Estimated Life

Accumulated Depreciation (straight-line)

Machine A

$78,200

$4,8000

15 years

$63,613 (13 years)

Machine B

22,000

2,400

8 years

14,700 (6 years)

The machines were disposed of in the following ways:

a. Machine A: Sold on January 2 for $22,000 cash.

b. Machine B: On January 2, this machine was sold to a salvage company at zero proceeds (and zero cost of removal).

Required - Prepare the journal entries related to the disposal of Machine A and B on the January 2 of the current year. TIP: When no cash is received on disposal, the loss on disposal will equal the book value of the asset at the time of disposal.

Reference no: EM133136388

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