Question

Problem 8-6A Disposal of plant assets LO C1, P1, P2 [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 $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 $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.

Answer 1

Journal Entries Post Credit Date Account Title and Explaination Debit (S) Ref. (S) |Мachine 192,000.00 1 Cash 192,000.00 Jan.2 (To record Cash paidfor purchase of Machine) Machine 8,000.00 2 Jan.2 Cash 8,000.00 (To record Cash paid for making machine ready to use) Machine 3 1,600.00 Cash $ Jan.3 1,600.00 (To record Cash paid for installation Platform for machine) b Depreciation Expense ($201600-$23040)/6 Accumulated Depreciation - Machine (To record Depreciation Expense for the year) Dec.31 29,760.00 29,760.00

If Sold for $23500 Cash Cash Accumulated Depreciation - Machine Loss on Sale of Machine а Dec.31 23,500.00 29,760.00 148,340.00 $ Machine 201,600.00 (To record sale of Machine at $23500) If Sold for $94000 Cash Cash Accumulated Depreciation - Machine Loss on Sale of Machine b Dec.31 94,000.00 $ 29,760.00 $ 77,840.00 Machine 201,600.00 (To record Sale of Machine at $94000) It is Destroyed and insurance received $34000 с Cash Dec.31 34,000.00 Accumulated Depreciation - Machine Loss on Disposal of Machine Machine 29,760.00 137,840.00 $ 201,600.00 (To record machine destroyed and insurance received)