Question

Onslow Co. purchases a used machine for $288,000 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 $34,560 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. Required: 1. Prepare journal entries to record the machine's purchase and the costs to ready and install it. Cash is paid for all costs incurred

Answer 1

| Credit Debit $288,000 Date General Journal January. 2 Machinery Cash (Being machine purchased recorded) $288,000 $ 8.000 January.3 Machinery Cash (Being macinery capital cost recorded) $ 8.000 $ 1,600 January.3 Machinery Cash (Being macinery capital cost recorded) $ 1,600