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Problem 8-6A (Algo) Disposal of plant assets LO C1, P1, P2
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Onslow Company purchased a used machine for $288,000 cash on
January 2. On January 3, Onslow paid $8,000 to wire electricity to
the machine. Onslow paid an additional $1,600 on January 4 to
secure the machine for operation. The machine will be used for six
years and have a $34,560 salvage value. Straight-line depreciation
is used. On December 31, at the end of its fifth year in
operations, it is disposed of.
Problem 8-6A (Algo) 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
2. Prepare journal entries to record
depreciation of the machine at December 31.
3. Prepare journal entries to record the
machine’s disposal under each separate situation: (a) it
is sold for $22,000 cash and (b) it is sold for $88,000
cash.