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Problem 8-6A Disposal of plant assets LO C1, P1, P2

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Onslow Co. purchased a used machine for $288,000 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 $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.

Problem 8-6A Part 3

3. Prepare journal entries to record the machine’s disposal under each separate situation: (a) it is sold for $23,000 cash; (b) it is sold for $92,000 cash; and (c) it is destroyed in a fire and the insurance company pays $33,500 cash to settle the loss claim.

Problem 8-6A Part 3 3. Prepare journal entries to record the machine's disposal under each separate situation: (a) it is sold for $23,000 cash; (b) it is sold for $92,000 cash; and (c) it is destroyed in a fire and the insurance company pays $33,500 cash to settle the loss claim. Answer is not complete. Credit No 1 Date Dec 31 General Journal Cash Accumulated depreciation Machinery Loss on sale of machinery Machinery Debit 23,000 113,600 17,000 153,600 X

Answer 1

1) Journal entry

Date	General Journal	Debit	Credit
	Cash	23000
	Accumulated depreciation-Machine (295200-34560/6*5)	217200
	Loss on sale of machine	55000
	Machine		295200
	(To record sale of machine)

2) Journal entry

Date	General Journal	Debit	Credit
	Cash	92000
	Accumulated depreciation-Machine (295200-34560/6*5)	217200
	Gain on sale of machine		14000
	Machine		295200
	(To record sale of machine)

3) Journal entry

Date	General Journal	Debit	Credit
	Cash	33500
	Accumulated depreciation-Machine (295200-34560/6*5)	217200
	Loss on Fire of machine	44500
	Machine		295200
	(To record sale of machine)