Question

Required information [The following information applies to the questions displayed below.] Part 1 of 3 1.42 points Onslow Co. purchased a used machine for $240,000 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 $28,800 salvage value. Straight-line depreciation is used. On December 31, at the end of its fifth year in operations, it is disposed of. Required: eBook 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. Print View transaction list Journal entry worksheet < 1 2 3 Record the purchase of a used machine for $240,000 cash. Note: Enter debits before credits. General Journal Debit Credit Date Jan 02 Record entry Clear entry View general journal

Answer 1

9)

While computing cost of acquisition of an asset,all the expenses which are incurred to make the asset ready to use should be included in it's cost.

Here, $8,000 paid to wire electricity the machine and $1,600 to arrange it in place should be included in the cost.So $9,600 is capitalized with the asset after being incurred.

1) Journal Entries in the books of Onslow Co.

Date	General Journal	Debit	Credit
Jan 2	Machine A/c                       Dr	$240,000
	To Cash A/c		$240,000
	(Being the second hand machine purchased for cash)
Jan 3	Machine A/c                       Dr	$9,600
	To Cash A/c		$9,600
	(Being the expenses are incurred to make the asset ready to use)