Rayya Co. purchases and installs a machine on January 1, 2015, at a total cost of $176,400. Straight-line depreciation is taken each year for four years assuming a seven-year life and no salvage value. The machine is disposed of on July 1, 2019, during its fifth year of service. 1. Record the depreciation expense as of July 1, 2019.
2. Record the sale of the machinery for $45,500 cash.
3. Record the total destruction of the machine in a fire with $25,000 cash insurance settlement.

1.Journal 2019 Expense:

Depreciation Expense $12,600 (debit)

Accumulated Depreciation $12,600 (credit)

2.Journal : Cash Sale of $45,500

Cash $45,500 (debit)

Accumulated Depreciation $113,400 (debit)

Profit an Loss $17,500 (debit)

Cost : Machine $176,400 (credit)

3.Journal : insurance settlement of  $25,000

Cash  $25,000 (debit)

Accumulated Depreciation $113,400 (debit)

Profit an Loss $38,000 (debit)

Cost : Machine $176,400 (credit)

Explanation:

Depreciation Expense (Straight line) = (Cost - Salvage Value) ÷ Estimated Useful Life

                                                             = $176,400 ÷ 7

                                                             = $25,200

2015

Depreciation Expense = $25,200

2016

Depreciation Expense = $25,200

2017

Depreciation Expense = $25,200

2018

Depreciation Expense = $25,200

2019

Depreciation Expense = $25,200 × 6/12

                                      = $12,600

Journal 2019 Expense:

Depreciation Expense $12,600 (debit)

Accumulated Depreciation $12,600 (credit)

Journal : Cash Sale of $45,500

Cash $45,500 (debit)

Accumulated Depreciation $113,400 (debit)

Profit an Loss $17,500 (debit)

Cost : Machine $176,400 (credit)

Journal : insurance settlement of  $25,000

Cash  $25,000 (debit)

Accumulated Depreciation $113,400 (debit)

Profit an Loss $38,000 (debit)

Cost : Machine $176,400 (credit)

answer; rapid growth in buyer demand and high buyer switching cost;

answer: in the short-run firms will respond by raising the price of turkey.

explanation: initially the long-run equilibrium is at a price of $5 per pound of turkey and a quantity of 50 million pounds per year. now, when webmd claims that a protein found in turkey will increase your expected lifespan by 4 years. the consumers demand for turkey will increase at every price shifting the demand curve to the right from d1 to d2. while, there will be no change in the supply curve in the short-run as it is not possible for producers to adjust supply so quickly. as a result the new equilibrium will occur at a higher price and a higher quantity of turkey.

thus, in the short run firms will respond by increasing the price of turkey, selling more quantity at a higher price and earning economic profits.