Onslow Co. purchased a used machine for $178,000 cash on January 2. On January 3, Onslow paid $2,840 to wire electricity to the machine. Onslow paid an additional $1,160 on January 4 to secure the machine for operation. The machine will be used for six years and have a $14,000 salvage value. Straight-line depreciation is used. On December 31, at the end of its fifth year in operations, it is disposed of.

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 of (a) its first year of operations and (b) the year of its disposal.

3. Prepare journal entries to record the machine’s disposal under each separate situation:

(a) It is sold for $15,000 cash 

(b) It is sold for $50,000 cash.