Question

[The following information applies to the questions displayed below] Saturn Co. purchases a used machine for $192.000 cash on January 2 and readies it for use the next day at an $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 $23.010 salvage value, Depreciation is to be charged on a straight-line basis. On December 31. the end of its fifth year in operations, it is disposed of value 700 points 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. (Omit the sign in your response.) Date General Journal Debit 11511 Credit Machinery purchase cost Jan. 2 (Click to select) (Click to select) Jan. 3 Preparation cost (Click to select) (Click to select Jan. 3 Operating platform cost (Click to select (Click to select)

Answer 1

1) Journal entries:
Date	General Journal	Debit $	Credit $
2-Jan	Machine	192000
	Cash		192000
	(purchase of machinery)
3-Jan	Machine	10000
	Cash		10000
	(preparation cost to make machine operational)
3-Jan	Machine	2000
	Cash		2000
	(making operating platform for machine)
2) Journal entries:
Date	General Journal	Debit $	Credit $
Dec 31, Yr 1	Depreciation - Machine	30165
	Acc. Dep. - Machine		30165
	(being depreciation for Year 1 204000-23010/6)
Dec 31, Yr 5	Depreciation - Machine	30165
	Acc. Dep. - Machine		30165
	(being depreciation for Year 5 204000-23010/6)
3) Journal entries:
a)
Date	General Journal	Debit $	Credit $
Dec 31, Yr 5	Cash	22000
	Acc. Dep. - Machine	150825
	Loss on disposal of Machine	31175
	Machine		204000
	(disposal of machine for $22000)
b)
Date	General Journal	Debit $	Credit $
Dec 31, Yr 5	Cash	98000
	Acc. Dep. - Machine	150825
	Income on disposal of Machine		44825
	Machine		204000
	(disposal of machine for $98000)
c)
Date	General Journal	Debit $	Credit $
Dec 31, Yr 5	Cash	32500
	Acc. Dep. - Machine	150825
	Loss on destroy of machine in fire	20675
	Machine		204000
	(Insurance settlement for 32500 on fire destroy)