Onslow Co. purchases a used machine for $192,000 cash on January 2 and prepares it for use the next day at a cost of $8,000. On January 3, it is installed on a required operating platform costing $1,600 and prepared for the operations. The company predicts the machine will be used for six years and have a salvage value of $23,040. Depreciation will be charged on a straight line basis. On December 31, at the end of its fifth year of operations, it is sold.

Prepare journal entries to record the depreciation of the machine as of December 31.

1. Its first year in operation (Record the year-end adjusting entry for the depreciation expense of the used machine)

2. The year of disposal (Record the year-end adjustment entry for the depreciation expense of the used machine)

3. Prepare journal entries to record the disposal of machines under each of the following separate assumptions

a) sold for $21,000 cash record the sale of the used machine for $21,000 in cash

B) I sold it for $84,000 record the sale of the used machine for $84,000

C) It is destroyed in a fire and the insurance company pays $31,500 in cash to settle the claim for loss record the received insurance settlement of $31,500 resulting from the total destruction of the machine

Answer rating: 100% (QA)

1 Its first year in operation Date December 31 2023 Account Depreciation Expense Debit 32000 Account ... View the full answer