Disposal of plant assets LO C1, P1, P2 Skip to question [The following information applies to the questions displayed below.]
Onslow Co. purchased a used machine for $288,000 cash on January 2. On January 3, Onslow paid $8,000 to wire electricity to the machine and an additional $1,600 to secure it in place. The machine will be used for six years and have a $34,560 salvage value. Straight-line depreciation is used. 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 it for use. Cash is paid for all costs incurred.
View transaction list Journal entry worksheet 2 Record the purchase of a used machine for $240,000 cash. Note: Enter debits before credits. Date Debit General Journal Credit Jan 02 Record entry Clear entry View general journal
2. Prepare journal entries to record depreciation of the machine at December 31. (a) Its first year in operations. View transaction list Journal entry worksheet Record the year-end adjusting entry for the depreciation expense of the used machine. Note: Enter debits before credits. Date Debit General Journal Credit Dec 31 Record entry Clear entry View general journal (b) The year of its disposal. View transaction list Journal entry worksheet Record the year-end adjusting entry for the depreciation expense of the used machine Note: Enter debits before credits. Date Debit General Journal Credit Dec 31 View general journal Record entry Clear entry Problem 8-6A Part 3 3. Prepare journal entries to record the machine's disposal under each of the following separate assumptions (a) It is sold for $23,000 cash. View transaction list Journal entry worksheet Record the sale of the used machine for $23,000 cash. Note: Enter debits before credits. Date General Journal Debit Credit Dec 31 Record entry Clear entry View general journal (b) It is sold for $92,000 cash. View transaction list Journal entry worksheet Record the sale of the used machine for $92,000 cash. Note: Enter debits before credits. Debit Date General Journal Credit Dec 31 View general journal Record entry Clear entry (c) It is destroyed in a fire and the insurance company pays $33,500 cash to settle the loss claim. View transaction list Journal entry worksheet Record the insurance settlement received of $33,500 resulting from the total destruction of the machine in a fire. Note: Enter debits before credits. General Journal Debit Credit Date Dec 31 Record entry Clear entry View general journal