Question

i nees journal entry for part 1 and part 2

part 1

Required information Problem 8-6A Disposal of plant assets LO C1, P1, P2 [The following information applies to the questions displayed below) Onslow Co. purchased a used machine for $192.000 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 $23,040 salvage value. Straight line depreciation is used on December 31, at the end of its fifth year in operations, it is disposed of

part 2

Answer 1

SOLUTION

Part 1

S.No.	Accounts titles and Explanation	Debit ($)	Credit ($)
1.	Depreciation expense- Machinery	29,760
	Accumulated depreciation- Machinery		29,760
	(To record first year depreciation expense)
2.	Depreciation expense- Machinery	29,760
	Accumulated depreciation- Machinery		29,760
	(To record disposal year depreciation expense)

Depreciation expense = (Purchase price - Salvage value) / Estimated useful life of asset

= {(192,000 + 8,000 + 1,600) - 23,040} / 6 years

= 29,760

Part 2

S.No.	Accounts titles and Explanation	Debit ($)	Credit ($)
1.	Cash	24,000
	Accumulated depreciation- Machinery (29,760*5)	148,800
	Loss on sale of machinery	28,800
	Machinery (192,000+8,000+1,600)		201,600
	(To record the sale of machinery)
2.	Cash	96,000
	Accumulated depreciation- Machinery (29,760*5)	148,800
	Gain on sale of machinery		43,200
	Machinery (192,000+8,000+1,600)		201,600
	(To record the sale of machinery)
3.	Cash	34,500
	Accumulated depreciation- Machinery (29,760*5)	148,800
	Loss from fire	18,300
	Machinery (192,000+8,000+1,600)		201,600
	(To record cash insurance settlement)