Rayya Company purchases a machine for $84,000 on January 1, 2021. Straight-line depreciation is taken each year for four years assuming a eight-year life and no salvage value. The machine is sold on July 1, 2025, during its fifth year of service. Prepare entries to record the partial year's depreciation on July 1, 2025, and to record the sale under each separate situation. (1) The machine is sold for $42,000 cash. (2) The machine is sold for $35,280 cash. View transaction list Journal entry worksheet < 2 3 >
Rayya Company purchases a machine for $84,000 on January 1, 2021. Straight-line depreciation is taken each year for four years assuming a eight-year life and no salvage value. The machine is sold on July 1, 2025, during its fifth year of service. Prepare entries to record the partial year's depreciation on July 1, 2025, and to record the sale under each separate situation. (1) The machine is sold for $42,000 cash. (2) The machine is sold for $35,280 cash. View transaction list Journal entry worksheet < 2 3 >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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Transcribed Image Text:Rayya Company purchases a machine for $84,000 on January 1, 2021. Straight-line depreciation is taken each year for four years
assuming a eight-year life and no salvage value. The machine is sold on July 1, 2025, during its fifth year of service.
Prepare entries to record the partial year's depreciation on July 1, 2025, and to record the sale under each separate situation. (1) The
machine is sold for $42,000 cash. (2) The machine is sold for $35,280 cash.
View transaction list
Journal entry worksheet
<
2
Record the sale of the machinery for $42,000 cash.
Note: Enter debits before credits.
Date
July 01, 2025 Cash
Record entry
General Journal
Accumulated depreciation-Machinery
Machinery
Gain on sale of machinery
Clear entry
Debit
Credit
View general journal
>
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