Question

Required information Problem 8-6A Disposal of plant assets LO C1, P1, P2 The following information applies to the questions dismayed 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 $1600 to secure it in place. The machine will be used for six years and have a 5.34560 salvage value. Straight line depreciation is used on December 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: (ait is sold for $21000 cash (it is sold for 584,000 cash and it is destroyed in a fire and the insurance company pays $31.500 cash to settle the loss claim. View transaction ist Journal entry worksheet 23 Record the sale of the used machine for $21,000 cash.

Answer 1

	Date	Accounts Titles and Explanation	Debit	Credit
1	Dec 31	Cash	$21,000
		Accumulated Depreciation	$219,200		($43,840 x 5)
		Loss on sale of machinery	$57,400
		Machinery		$297,600
		(To record sale of machine)
	Working
		Calculation of Cost of the Machine:-
		Purchase Cost	$288,000
		Paid for wire electricity	$8,000
		Paid for secure it place	$1,600
			$297,600
		Less: Salvage value	$34,560
		Depreciable Cost	$263,040
		Life of machine	6 years
		Depreciation per year	$43,840
2	Dec 31	Cash	$84,000
		Accumulated Depreciation	$219,200		($43,840 x 5)
		Gain on sale of machinery		$5,600
		Machinery		$297,600
		(To record sale of machine)
3		Cash	$31,500
		Accumulated Depreciation	$219,200		($43,840 x 5)
		Loss from fire	$46,900
		Machinery		$297,600
		(To record insurance settlement )