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Martinez Company has an old factory machine that cost $66,000. The machine has accumulated depreciation of $36,960. Martinez 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 Martinez make to record the sale of the machine for $33,000 cash?
(b)What entry would Martinez make to record the sale of the machine for $19,800 cash?

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Zviko

Answer:

(a) the sale of the machine for $33,000 cash

Cash $33,000 (debit)

Accumulated Depreciation $36,960 ( debit)

Profit on Sale of Machine $ 3,960 (credit)

Machine $66,000 (credit)

(b) the sale of the machine for $19,800 cash

Cash $19,800 (debit)

Accumulated Depreciation $36,960 ( debit)

Loss on Sale of Machine $9,240 (debit)

Machine $66,000 (credit)

Explanation:

On Sale of Asset the Following takes place :

  1. De-recognise the Cost of Asset
  2. De-recognise the Depreciation of Asset to date
  3. Recognise the Proceeds from the sale of Assets
  4. Recognise the Profit or Loss from Sale in the Income Statement

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