Prepare the necessary entry required by Phonetic

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Question - On January 1st, 2018, Phonetic Company purchased machinery costing $146,000 and incurred $5,000 in installation costs. The machinery has an estimated useful life of 15 years and a residual value of $10,000. The company uses the straight-line method of depreciation. At the end of 2019, Phonetic recorded depreciation and assessed the asset, determining a recoverable amount of $127,000. Phonetic sold the equipment to Voilex Corporation on June 30th, 2020, for $130,000.

Required -

1. Prepare the necessary entry required by Phonetic to record the purchase of the Machine on January 1st, 2018.

2. Prepare the necessary entries for Phonetic on December 31st, 2019.

3. Prepare the compound entry required for the sale of the Machinery on June 30th, 2020.

Reference no: EM132520543

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