Onslow Co. purchases a used machine for $240,000 cash on January 2 and readies i
ID: 2418148 • Letter: O
Question
Onslow Co. purchases a used machine for $240,000 cash on January 2 and readies it for use the next day at a $6,000 cost. On January 3, it is installed on a required operating platform costing $1,200, and it is further readied for operations. The company predicts the machine will be used for six years and have a $28,800 salvage value. Depreciation is to be charged on a straight-line basis. On December 31, at the end of its fifth year in operations, it is disposed of.
1)Prepare journal entries to record the machine's purchase and the costs to ready and install it. Cash is paid for all costs incurred.
2)Prepare journal entries to record depreciation of the machine at December 31
a) Its first year in operations.
b)The year of its disposal.
3)Prepare journal entries to record the machine's disposal under each of the following separate assumptions:
a)It is sold for $20,500 cash.
b)It is sold for $82,000 cash.
c)It is destroyed in a fire and the insurance company pays $31,000 cash to settle the loss claim.
Onslow Co. purchases a used machine for $240,000 cash on January 2 and readies it for use the next day at a $6,000 cost. On January 3, it is installed on a required operating platform costing $1,200, and it is further readied for operations. The company predicts the machine will be used for six years and have a $28,800 salvage value. Depreciation is to be charged on a straight-line basis. On December 31, at the end of its fifth year in operations, it is disposed of.
1)Prepare journal entries to record the machine's purchase and the costs to ready and install it. Cash is paid for all costs incurred.
2)Prepare journal entries to record depreciation of the machine at December 31
a) Its first year in operations.
b)The year of its disposal.
3)Prepare journal entries to record the machine's disposal under each of the following separate assumptions:
a)It is sold for $20,500 cash.
b)It is sold for $82,000 cash.
c)It is destroyed in a fire and the insurance company pays $31,000 cash to settle the loss claim.
Explanation / Answer
Cost of machineary Purchases 240,000 Repaire 6,000 operating platform costing 1,200 Total Machine 247,200 Machineary A/c Dr 247,200 To Cash 240000 To Repaire 6000 To operating platform costing 1200 ( Being Machineary purchased ) Calculation of Depreciation Total value of Machineary - Salvage 218,400 6 Year 36400 Depreciation A/c Dr 36400 To Machineary 36400 ( Being depreciation accounted ) Cash A/c Dr 20500 To Sale of machineary 20500 ( Being sale of machineary ) Cash A/c Dr 82000 To Sale of machineary 82000 ( Being sale of machineary ) Cash A/c Dr 31000 To Insurance company 82000 ( Being cash received from insurance company )
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.