Rayya Co. purchases and installs a machine on January 1, 2016, at a total cost of...

Rayya Co. purchases and installs a machine on January 1, 2016, at a total cost of $142,800. Straight-line depreciation is taken each year for four years assuming a eight-year life and no salvage value. The machine is disposed of on July 1, 2020, during its fifth year of service.

Prepare entries to record the partial year’s depreciation on July 1, 2020.

Record the depreciation expense as of July 1, 2020.

Prepare entries to record the disposal under the following separate assumptions:

1. The machine is sold for $71,400 cash.|

Record the sale of machinery for $71,400 cash.

2. An insurance settlement of $59,976 is received due to the machine’s total destruction in a fire.

Record the insurance settlement received of $59,976 resulting from the total destruction of the machine in a fire.

Expert Solution

Record the depreciation expense as of July 1, 2020.

Date	accounts & explanation	debit	Credit
2020, july 1	Depreciation expense (142800/8)*6/12	8925
	Accumlated depreciation		8925
	(To record depreciation)

Record the sale of machinery for $71,400 cash.

Date	accounts & explanation	debit	Credit
2020,july 1	Cash	71400
	Accumlated depreciation (142800/8)*4.5	80325
	Machine		142800
	Gain on sale of machine		8925
	(To record sale of machine)

Record the insurance settlement received of $59,976 resulting from the total destruction of the machine in a fire.

Date	accounts & explanation	debit	Credit
2020,july 1	Cash	59976
	Accumlated depreciation (142800/8)*4.5	80325
	Loss on destruction of machin	2499
	Machine		142800
	(To record destruction of machine)

ekkarill92 answered 2 years ago

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