Question

Onslow Co. purchases a used machine for $144,000 cash on January 2 and readies it for use the next day at a $8,000 cost. On January 3, it is installed on a required operating platform costing $1,600, and it is further readied for operations. The company predicts the machine will be used for six years and have a $17,280 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.

Record the purchase of a used machine for $144,000 cash.

	Date General Journal Debit Credit Jan 02

Record the costs of $8,000 incurred on the used machine.

	Date General Journal Debit Credit Jan 03

Record the cost of $1,600 for an operating platform.

	Date General Journal Debit Credit Jan 03

Record the first year year-end adjusting entry for the depreciation expense of the used machine.

	Date General Journal Debit Credit Dec 31

Record the fifth year year-end adjusting entry for the depreciation expense of the used machine.

	Date General Journal Debit Credit Dec 31

Answer 1

Solution:

Onslow Co.
Date	General Journal	Debit	Credit
02-Jan	Machinery	144000
	Cash		144000
03-Jan	Machinery	8000
	Cash		8000
03-Jan	Machinery	1600
	Cash		1600
31-Dec	Depreciation expense [{(144000+8000+1600) - 17280}/6]	22720
First Year	Accumulated Depreciation		22720
31-Dec	Depreciation expense	22720
Second Year	Accumulated Depreciation		22720