A company owns a production machine that cost $5,000 with a salvage value of zero. The...

A company owns a production machine that cost $5,000 with a salvage

value of zero. The machine was just sold for $1,100. Accumulated

depreciation has just been updated and accurately reflects an amount

of $4,000. In good order and form record the necessary General Journal

entry to dispose of the machine

Expert Solution

Book value of the asset = Cost of asset – accumulated depreciation

= 5000 – 4000

= 1000

The asset was sold for 1100, which is higher than the asset book value, so there is a gain on sale of asset.

Gain on sale = 1100 – 1000 = 100

Cash Dr	1,100
Accumulated depreciation Dr	4,000
Gain on asset disposal Cr		100
Machine asset Cr		5,000

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ekkarill92 answered 3 years ago

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