Required information The following information applies to the questions displaye

Question

Required information The following information applies to the questions displayed below. Onslow Co. purchases a used machine for $192,000 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 havea $23,040 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. Required 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. View transaction list Record the purchase of a used machine for $192,000 cash 1 2 Record the costs of $6,000 incurred on the used machine 3 Record the cost of $1,200 for an operating platform.

Explanation / Answer

Journal entries:

S NO. TRANSACTIONS AMOUNT($) Dr. AMOUNT($) Cr. 1. Machine 192,000 To Cash 192,000 2. Machine 6,000 To Cash (Cost of making the machine ready for use) 6,000 3. Machine 1,200 To Cash (cost of installing on an operating platform) 1,200 Note: All the above costs are actually the acuisition costs of the machine which are incurred to prepare the asset for its intended use.

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