Exercise 1024 Part Level Submission On December 31 2017 Stel

Exercise 10-24 (Part Level Submission) On December 31, 2017, Stellar Inc. has a machine with a book value of $977,600. The original cost and related accumulated depreciation at this date are as follows. Machine Less: Accumulated depreciation Book value $1,352,000 374,400 $977,600 Depreciation is computed at $62,400 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 fire completely destroys the machine on August 31, 2018. An insurance settlement of $447,200 was received for this casualty. Assume the settlement was received immediately. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select \"No Entry\" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit August 31, 2018 (To record current depreciation.) August 31, 2018 (To record loss of the machine.)

Solution

Journal entry :

Date	account & explanation	debit	credit
August 31, 2018	Depreciation expense (62400*8/12)	41600
	Accumlated depreciation		41600
	(To record depreciation)
August 31, 2018	Cash	447200
	Accumlated depreciation (41600+374400)	416000
	Loss from fire on machine	488800
	Machine		1352000
	(To record loss of the machine)