6 Check my work Required information The following information applies to the qu
ID: 2390846 • Letter: 6
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6 Check my work Required information The following information applies to the questions displayed below Onslow Co. purchases a used machine for $240,000 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 $28,800 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. Part 1 of 3 1.87 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. eBook Print View transaction listView journal entry worksheet 7 Check nm The following information applies to the questions displayed below Onslow Co. purchases a used machine for $240,000 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 $28,800 salvage value. Depreciation is to be charged on a straight-line basis. On December 31, at the end of its fifth year in operations, t is Part 2 of 3 disposed of. 1.87 points 2. Prepare journal entries to record depreciation of the machine at December 31. eBook Print References View transaction list Required information The following information applies to the questions displayed below) Part 3 of 3 Onslow Co. $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 $28,800 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 purchases a used machine for $240.000 cash on January 2 and readies it for use the next day at a 1.91 points eBook Print 3. Prepare journal entries to record the machine's disposal under each of the following separate assumptions: 1. Record the sale of the used machine for $21,000 cash 2. Record the sale of the used machine for $84,000 cash. 3. Record the insurance settlement received of $31,500 resulting from the total destruction of the machine in a fireExplanation / Answer
Answer- 1: Prepare journal entries to record the machine's purchase and the costs to ready and install it:
Date
Accounts Title and Explanation
Debit
Credit
Jan-02
Machinery
240000
Cash
240000
(To record the purchase of machinery)
Jan-03
Machinery
8000
Cash
8000
(To record the cost to ready the machine for use)
Jan-03
Machinery
1600
Cash
1600
(To record the installation expense of machinery)
Answer-2: Prepare journal entries to record depreciation of the machine at December 31:
Annual Depreciation of Machinery:
= (Cost of the Machine – Salvage Value) / Useful Life of the Asset
= (249,600 – 28,800) / 6 = $ 36,800
Date
Accounts Title and Explanation
Debit
Credit
Year 1
Dec-31
Depreciation Expense
36800
Accumulated Depreciation - Machinery
36800
(To record the depreciation on machinery)
Year 2
Dec-31
Depreciation Expense
36800
Accumulated Depreciation - Machinery
36800
(To record the depreciation on machinery)
Year 3
Dec-31
Depreciation Expense
36800
Accumulated Depreciation - Machinery
36800
(To record the depreciation on machinery)
Year 4
Dec-31
Depreciation Expense
36800
Accumulated Depreciation - Machinery
36800
(To record the depreciation on machinery)
Year 5
Dec-31
Depreciation Expense
36800
Accumulated Depreciation - Machinery
36800
(To record the depreciation on machinery)
Answer -3: Prepare journal entries to record the machine's disposal under each of the following separate assumptions:
Original Cost of Machinery = 249,600
Less: Accumulated Depreciation= 184,000
Book Value of Machinery on date of sale = 65,600
Date
Accounts Title and Explanation
Debit
Credit
a) Machine is sold for $ 21,000 cash
Dec-31
Cash
21000
Accumulated Depreciation- Machinery
184000
Loss on Sale of Machinery
44600
Machinery
249600
(To record the disposal of machinery )
b) Machine is sold for 84000
Dec-31
Cash
84000
Accumulated Depreciation - Machinery
184000
Machinery
249600
Gain on Sale of machinery
18400
(To record the disposal of machinery )
c) Machinery is destroyed and Claim of $ 31,500 received
Dec-31
Cash
31500
Accumulated Depreciation- Machinery
184000
Loss from fire
34100
Machinery
249600
(To record the destruction of machinery due to fire)
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Date
Accounts Title and Explanation
Debit
Credit
Jan-02
Machinery
240000
Cash
240000
(To record the purchase of machinery)
Jan-03
Machinery
8000
Cash
8000
(To record the cost to ready the machine for use)
Jan-03
Machinery
1600
Cash
1600
(To record the installation expense of machinery)
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