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Item$4$

Item $4$

On July $1,2021,$ Fitzgerald Corp. bought a machine for use in operations. The machine has an estimated useful life of six years and an estimated residual value of $$8,500.$ The company provided the following information:

$$

Invoice price of the machine, $$132,000.$

Freight paid by the vendor per sales agreement, $$1,250.$

Installation costs, $$8,500$ cash.

Payment of the machine's price was made as follows:

July $1$:

Fitzgerald Corp. issued $2,000$ common shares at $$17$ per share.Signed an interest$-$bearing note for the balance of the invoice price, payable on September $1,2021,$ plus $9$ percent interest.

September $1$: Paid the note payable and related interest in cash.

On June $30,2024,$ the company completed the replacement of a major part of the machine that cost $$17,500.$ This expenditure is expected to reduce the machine$$s operating costs and increase its estimated useful life by two years. At the same time, the machine$$s estimated residual value was reduced to $$8,000.$

Assume that on July $1,2028,$ the company decided to dispose of the machine by selling it to Ayad Inc. on that date for $$28,000$ cash.

$3.$ Prepare the journal entry to record the sale of the machine on July $1,2028.($Hint: First determine the balance of the accumulated depreciation account on that date.$)($Do not round intermediate calculations. If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field.$)$

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