Question

Selected accounts included in the property

<p><br /></p>Question<p>Selected accounts included in the property, plant, and equipment section of Faulty Corporation's balance sheet at December 31, 2017, had the following balances: Land $ 400,000 Land improvements 130,000 Buildings 2,000,000 Machinery and equipment 800,000 .During 2018, the following transactions occurred: &gt;&gt; A machine costing $18,000 on July 1, 2016, was scrapped on June 30, 2018. Sum –of- the year’s digits had been recorded on the basis of a 5-year life with no salvage value. &gt;&gt; A machine was sold for $38,000 on July 1, 2018. Original cost of the machine was $72,000 on Feb 28, 2015, and it was depreciated on the double-declining balance basis over an estimated useful life of eight years and a salvage value of $2,000.</p><p><strong>a. Calculate the gain or loss on the disposal of each asset. Place your answer in the appropriate column.</strong></p><table><tbody><tr><td> <p><strong>Item</strong></p> </td> <td> <p><strong>Amount of gain</strong></p> </td> <td> <p><strong>Amount of loss</strong></p> </td> </tr><tr><td> <p><strong>Scrapped machine on 6/30/18</strong></p> </td> </tr><tr><td> <p><strong>Sale</strong> <strong>of machine on 7/1/18</strong></p> </td> </tr></tbody></table><p><strong>b. Prepare the journal entries for the disposal &amp; sale of the machine during 2018. Year 2018 depreciation has yet been recorded.</strong></p><table><tbody><tr><td> <p><strong>Date</strong></p> </td> <td> <p><strong>Account</strong></p> </td> <td> <p><strong>Debit</strong></p> </td> <td> <p><strong>Credit</strong></p> </td> </tr></tbody></table><p>Comment</p>