Ly Company disposed of two dif

Ly Company disposed of two different assets. On January 1, priorto their disposal, the accounts reflected the following:

Asset Original Cost Residual Value Estimated Life Accumulated Depreciation (straight-line)
Machine A $ 32,000 $ 3,200 5 years $ 23,040 (4 years)
Machine B 61,200 3,100 14 years 45,650 (11 years)

The machines were disposed of in the following ways:

  1. Machine A: Sold on January 1 for $9,500 cash.
  2. Machine B: On January 1, this machine was sold to a salvagecompany at zero proceeds (and zero cost of removal).


  1. 1. & 2. Prepare the journal entries relatedto the disposal of Machine A and B at the beginning of the currentyear. (If no entry is required for a transaction/event,select “No Journal Entry Required” in the first accountfield.)



Cost of machine A = $32,000

Accumulated depreciation = $23,040

Book value of machine A = Cost of machine-Accumulateddepreciation

= 32,000-23,040

= $8,960

Sale price of machine A = $9,500

Gain on sale of machine A = Sale price of machine A – Book valueof machine A

= 9,500-8,960

= $540

GeneralJournal Debit Credit
Cash $9,500
Accumulated depreciation- Machine $23,040
Gain on sale of machine $540
Machine A $32,000


Cost of machine B = $61,200

Accumulated depreciation = $45,650

Book value of machine B = Cost of machine-Accumulateddepreciation

= 61,200-45,650

= $15,550

Sale price of machine B = $0

Loss on sale of machine B=  Book value of machine B-Sale price of machine B


= $15,550

GeneralJournal Debit Credit
Accumulated depreciation- Machine $45,650
Loss on sale of machine $15,550
Machine B $61,200

Kindly comment if you need furtherassistance.


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