Rayya Co. purchases and installs a machine on January 1, 2018, at a total cost of $151,200. 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, 2022, during its fifth year of service. Prepare entries to record the partial year’s depreciation on July 1, 2022, and to record the disposal under the following separate assumptions: (1) The machine is sold for $75,600 cash. (2) An insurance settlement of $63,504 is received due to the machine’s total destruction in a fire.

Entries to record the partial year’s depreciation on July 1

Depreciation $9,450 (debit)

Accumulated Depreciation $9,450 (credit)

Entries to record the disposal under the following separate assumptions:

(1) The machine is sold for $75,600 cash

Cash $ 75,600 (debit)

Accumulated Depreciation $ 75,600 (debit)

Machine $151,200 (credit)

(2) An insurance settlement of $63,504 is received due to the machine’s total destruction in a fire

Cash $ 65,504 (debit)

Accumulated Depreciation $ 75,600 (debit)

Profit and Loss $10,096 (debit)

Machine $151,200 (credit)

Explanation:

Depreciation Calculation = ($151200/8)×1/2

                                         = $9,450

Accumulated Depreciation up to July 1, 2022 = 18900×4 years+9450

                                                                            = 75600+9450

                                                                            = 75,600

(1) The machine is sold for $75,600 cash

Neither a Profit nor a Loss is Made on Sale of Machine

(2) An insurance settlement of $63,504 is received due to the machine’s total destruction in a fire

There is a loss on compensation of  $10,096

if you use only 25 for your entertainment and only 200 for the groceries that you really need and take out the 50 per month for the computer then that should be enough

engine assembler, survey reasearcher, auditor