Question

(The following information applies to the questions displayed below.) 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.

Answer 1

a) Journal entry

date	account and explanation	Debit	Credit
Dec 31	Depreciation expense (153600-17280/6)	22720
	Accumulated depreciation-machine		22720
	(To record Dep)

b) Journal entry

date	account and explanation	Debit	Credit
Dec 31	Depreciation expense (153600-17280/6)	22720
	Accumulated depreciation-machine		22720
	(To record Dep)