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: >> A machine costing $18,000 on July 1, 2011, was scrapped on June 30, 2018. Straight-line depreciation had been recorded on the basis of a 10-year life with no salvage value. >> A machine was sold for $38,000 on July 1, 2018. Original cost of the machine was $74,000 on January 1, 2015, and it was depreciated on the sum-of-the-years' digits basis over an estimated useful life of eight years and a salvage value of $2,000.
Required:
a.Calculate the gain or loss on the disposal of each asset. Place your answer in the appropriate column .
b.Prepare the journal entries for the disposal & sale of the machine during 2018. Year 2018 depreciation has yet been recorded.