During the current year Rayon Corporation disposed of two di

During the current year, Rayon Corporation disposed of two different assets. On January 1, prior to their disposal, the accounts reflected the following:

Solution

1)No depreciation is to be charged during the year in which is sold. Hence no journal entry required.

2)sale of machine A

Cash account DR 39000

Accumulated depreciation Dr 25850

To machine A 63000

To profit on sale 1850

(being machine sold during the year)

3)No entry is required.

4)For writting off the machine following journal entry need to pass.

Accumulated depreciation Dr 7410

Loss on disposal Dr 7090

To machine B 14500

(being machine B is discarded)

Note it is assumed on the disposal of machine B nothing is realized even Residual value.