Question

Required Information The following information applies to the questions displayed below.) Onslow Co. purchases a used machine for $192,000 cash on January 2 and readies it for use the next day at a $10,000 cost. On January 3, it is installed on a required operating platform costing $2,000, and it is further readied for operations The company predicts the machine will be used for six years and have a $23.040 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 2. Prepare journal entries to record depreciation of the machine at December 31.

Answer 1

Cost of machine = Cash purchase price + Overhandling cost + Installation cost

= 192,000 + 10,000 + 2,000

= $204,000

Salvage value = $23,040

Useful life = 6 year

Annual depreciation = (Cost price - salvage value)/Useful life

= (204,000 - 23,040)/6

= 180,960/6

= $30,160

1.

Journal

Date	Account Title and Explanation	Debit	Credit
Dec. 31	Depreciation expense	30,160
	Accumulated depreciation - Equipment		30,160

2.

Journal

Date	Account Title and Explanation	Debit	Credit
Dec. 31	Depreciation expense	30,160
	Accumulated depreciation - Equipment		30,160

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