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KMG Corporation - Gains and Losses

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KMG Corporation is in the business of manufacturing and selling seasonal handcrafts and other decorative items. The company operates one retail shop in the Seattle area, and also rents space at the famous Pike Place Market at which
it displays and sells its merchandise.

The following transactions for KMG Corporation occurred during 2006:

1. On September 4, 2006, The company disposed of 2 obsolete
computers with an original cost of $1,000 each. The computers
were fully depreciated at the time of the disposal, and KMG Corporation
received no proceeds on the disposition.

2. On March 11, 2006, the company completed a special order for a
local home gallery. The order included an arrangement of dried flowers
and spring wreaths that cost the company $1,500 to produce. The items
were sold for $3,500 on March 17, 2006.

3. On November 30, 2006, the company sold 2 display cases to another
vendor for $2,500 each. The display cases were purchased in January 2005
and had been used by KMG to display its inventory at the Market. The
cases had a net book value of $1,000 each at the time of the sale.

Required:

Compute the gain or loss on fixed asset dispositions that KMG Corporation
would recognized for the year ending December 31, 2006.

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Solution Summary

This file contatins a formatted MS Excel file containing the journal entries for KMG Corporation.

Solution Preview

For your convenience, I have attached a formatted MS Excel file containing the journal entries requested in your post.

1. On September 4, 2006, The company disposed of 2 obsolete
computers with an original cost of $1,000 each. The computers
were fully depreciated at the time of the disposal, and KMG Corporation
received no proceeds on the disposition. ...

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