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Required information Problem 10-6A Disposal of plant assets LO C1, P1, P2 (The following information applies to the questions displayed below.) Onslow Co. purchased a used machine for $144,000 cash on January 2. On January 3, Onslow paid $8,000 to wire electricity to the machine and an additional $1,600 to secure it in place. The machine will be used for six years and have a $17,280 salvage value. Straight-line depreciation is used. On December 31, at the end of its fifth year in operations, it is disposed of. Problem 10-6A Part 1 Required: 1. Prepare journal entries to record the machine's purchase and the costs to ready it for use. Cash is paid for all costs incurred. 1 Record the purchase of a used machine for $144,000 cash. 2 Record the costs of $8,000 incurred on the used machine. 3 Record the cost of $1,600 for an operating platform. 2. Prepare journal entries to record depreciation of the machine at December 31. 1 Record the first year year-end adjusting entry for the depreciation expense of the used machine. 2 Record the year of disposal year-end adjusting entry for the depreciation expense of the used machine. 3. Prepare journal entries to record the machine's disposal under each separate situation: (a) it is sold for $24,500 cash; (b) it is sold for $98,000 cash; and (c) it is destroyed in a fire and the insurance company pays $35,000 cash to settle the loss claim. 1 Record the sale of the used machine for $24,500 cash. 2 Record the sale of the used machine for $98,000 cash. 3 Record the insurance settlement received of $35,000 resulting from the total destruction of the machine in a fire