CourseLover

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Category > Accounting Posted 12 Dec 2017 My Price 10.00

accounting for the sale of the machine

I need help with answering this question:

An entity purchases a machine for its factory on 1 July 20x0 for $90,000. It is estimatedthat the machine has a useful life of 8 years, and straight-line depreciation is used todepreciate the machine. On 30 June 20x2, the entity receives an unexpected offer toexchange the machine for a truck which originally cost $70,000 and has a market valueof $20,000. Which of the following journal entries is most appropriate when accountingfor the sale of the machine and the receipt of the truck as payment?

A: 30 June 20x2Dr Motor Vehicles 70,000Dr Acc. Dep. Machinery/Equipment 22,500Cr Gain on Sale 2,500Cr Machinery/Equipment 90,000To record sale of machine and purchase of the truck

B: 30 June 20x2Dr Motor Vehicles 20,000Dr Loss on Sale 67,500Cr Machinery/Equipment 90,000To record sale of machine and purchase of the truck

C: 30 June 20x2Dr Motor Vehicles 70,000Cr Gain on Sale 2,500Cr Machinery/Equipment 67,500To record sale of machine and purchase of the truck

D: 30 June 20x2Dr Motor Vehicles 70,000Dr Acc. Dep. Motor Vehicles 33,750Cr Gain in Sale 13,750Cr Machinery/Equipment 90,000To record same of machine and purchase of the truck

E: 30 June 20x2Dr Motor Vehicles 20,000Dr Loss on Sale 47,500Dr Acc. Dep. Motor Vehicles 22,500Cr Machinery/Equipment 90,000To record sale of machine and purchase of the truckF: none of the above

Answers

CourseLover
(12)
Status NEW Posted 12 Dec 2017 06:12 AM My Price 10.00

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