Question

Bramble Company has an old factory machine that cost $65,000. The machine has accumulated depreciation of $36,400. Bramble has decided to sell the machine. (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.)

(a)		What entry would Bramble make to record the sale of the machine for $33,400 cash?
(b)		What entry would Bramble make to record the sale of the machine for $23,400 cash?

No.	Account Titles and Explanation	Debit	Credit
(a)	enter an account title to record the first transaction	enter a debit amount	enter a credit amount
	enter an account title to record the first transaction	enter a debit amount	enter a credit amount
	enter an account title to record the first transaction	enter a debit amount	enter a credit amount
	enter an account title to record the first transaction	enter a debit amount	enter a credit amount
(b)	enter an account title to record the second transaction	enter a debit amount	enter a credit amount
	enter an account title to record the second transaction	enter a debit amount	enter a credit amount
	enter an account title to record the second transaction	enter a debit amount	enter a credit amount
	enter an account title to record the second transaction	enter a debit amount	enter a credit amount

Answer 1

Ans:

a) Journal when sale effected at $ 33,400 Cash :

	Debit	Credit
Cash A/c Dr.	$ 33,400
Accumulated Depreciation A/c Dr.	$ 36,400
Factory Machine A/c		$ 65,000
Profit on Sale of Factory Machine A/c		$ 4,800

Note :

Profit/ Loss on Sale =

=  Sale Price - ( Book Value of the Machine on date of Sale)

= Sale Price - (Cost of the Actual Machine - Accumulated Depreciation )

= $ 33,400 - ($ 65,000 - $ 36,400)

= $ 4800

b)

Journal when sale effected at $ 23,400 Cash :

	Debit	Credit
Cash A/c Dr.	$ 23,400
Accumulated Depreciation A/c Dr.	$ 36,400
Loss on Sale of Factory Machine A/c Dr.	$ 5,200
Factory Machine A/c		$ 65,000

Note :

Profit/ Loss on Sale =

=  Sale Price - ( Book Value of the Machine on date of Sale)

= Sale Price - (Cost of the Actual Machine - Accumulated Depreciation )

= $ 23,400 - ($ 65,000 - $ 36,400)

= ($ 5,200)

Hope this helped ! Let me know in case of any queries.