Question

On January 1, 2014, Ultra Green Packaging purchased a used machine for $156,000. The next day, it was repaired at a cost of $4,068 and mounted on a new platform that cost $5,760. Management estimated that the machine would be used for seven years and would then have a $21,600 residual value. Depreciation was to be charged on a straight-line basis to the nearest whole month. A full year’s depreciation was charged on December 31, 2014, through to December 31, 2018, and on April 1, 2019, the machine was retired from service.

Required
1. Prepare journal entries to record the purchase of the machine, the cost of repairing it, and the installation. Assume that cash was paid.
2. Prepare entries to record depreciation on the machine on December 31, 2014, and on April 1, 2019 (round calculations to the nearest whole dollar).
3. Prepare entries to record the retirement of the machine under each of the following unrelated assumptions:
a. It was sold for $36,000.
b. It was sold for $60,000.
c. It was destroyed in a fire and the insurance company paid $24,000 in full settlement of the loss claim.



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  • CreatedJanuary 08, 2015
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