During 2017, Bhumika Company disposed of two different assets. On January 1, 2017, prior to the assets’ disposal, the accounts reflected the following:
The machines were disposed of in the following ways:
a. Machine A: This machine was sold on January 2, 2017, for $8,200 cash.
b. Machine B: On January 2, 2017, this machine suffered irreparable damage from an accident and was removed immediately by a salvage company at no cost.
Required:
1. Give the journal entries related to the disposal of each machine at the beginning of 2017.
2. Explain the accounting rationale for the way that you recorded each disposal.
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