Ottawa corporation owns machinery that cost $20,000 when purchased on july 1, 2017. depreciation has been recorded at a rate of $2,400 per year, resulting in a balance in accumulated depreciation of $8,400 at december 31, 2020. the machinery is sold on september 1, 2021, for $10,500. prepare journal entries to (a) update depreciation for 2021 and (b) record the sale.

The journal entries are as follows:

(a) update depreciation for 2021

Depreciation expense A/c   Dr. $1,600

To accumulated depreciation - machinery      $1,600

(To record the depreciation on machinery till the date of sale)

Workings:

Depreciation expense:

= Depreciation for the year × [(number of month till the date of sale) ÷ 12 months]

= $2,400 × [(8 months) ÷ 12 months]

= $1,600

(b) Record the sale

Cash A/c                                                          Dr. $10,500

Accumulated depreciation - machinery A/c  Dr. $10,000

To machinery                                                                          $20,000

To gain on sale of machinery                                                 $500

(To record the sale of machinery)

Workings:

Accumulated depreciation as on 01/09/2021:

= Beginning balance + depreciation for the year 2021

= $8,400 + $1,600

= $10,000

Gain on sale of machinery:

= sale value of machinery - Book value of machinery

= $10,500 - (20,000 - 10,000)

= $10,500 - 10,000

= $500

answer; maintain a safe following distance;

urban company reports the following information regarding its production cost: units produced 37,000 units direct labor $ 30 per unit direct materials $ 35 per unit variable overhead $ 237,000 in total fixed overhead $ 127,000 in total