Question

int Chapter 10 Saved Help Save Required information (The following information applies to the questions displayed below.) Onslow Co. purchased a used machine for $144,000 cash on January 2 On January 3, Onslow paid $6,000 to wire electricity to the machine and an additional $1,200 to secure it in place. The machine will be used for six years and have a $17,280 salvage value. Straight-line depreciation is used. On December 31, at the end of its fifth year in operations, it is disposed of. 3. Prepare journal entries to record the machine's disposal under each separate situation: (a) it is sold for $22.000 cash; (b) it is sold for $88,000 cash, and (it is destroyed in a fire and the insurance company pays $32,500 cash to settle the loss claim. Journal entry worksheet < 1 2 3 Record the insurance settlement received of 532.500 resulting from the total destruction of the machine in a fire. Note Enter debits before credits < Prey 6 of 6 !!! Next

Answer 1

Solution:

Journal Entries
Transaction	Particulars	Debit	Credit
(a)	Cash Dr	$22,000
	Accumulated Depreciation Dr (151200-17280)*5/6)	$1,11,600
	Loss on sale of machine Dr	$17,600
	To Machine		$1,51,200
(b)	Cash Dr	$88,000
	Accumulated Depreciation Dr	$1,11,600
	To Machine		$1,51,200
	To Gain on sale of Machine		$48,400
(c )	Cash Dr	$32,500
	Accumulated Depreciation Dr	$1,11,600
	Loss on Sale of Equipment	$7,100
	To Machine		$1,51,200