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Machine Sale - Book value and journal entry

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On January 1, Year 1, Jayco purchased a machine for $6,000. It had an estimated salvage value of $1,200 and a life of six years. The straight-line method of depreciation was used. At, midyear in Year 4, Jayco sold the machine for $4,500 cash.

Required:

a. What is the book value of the machine at the time of the sale?
b. Give the journal entry to record the sale of the machine.

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Solution Summary

The solution explains how to calculate the book value of the machine at the time of sale and pass the journal entry for sale of machine.

Solution Preview

a. Under the straight line method, Depreciation = (Cost - Salvage Value)/Useful Life
Depreciation per year = ...

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