Onslow Co. purchased a used machine for $240,000 cash on January 2. On January 3, Onslow paid $6,000 to wire electricity to the machine and an additional $1,200 to secure it in place. The machine will be used for six years and have a $28,800 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.

• 1

  Record the purchase of a used machine for $240,000 cash.

• 2

  Record the costs of $6,000 incurred on the used machine.

• 3

  Record the cost of $1,200 for an operating platform

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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 machines disposal under each separate situation: (a) it is sold for $24,000 cash; (b) it is sold for $96,000 cash; and (c) it is destroyed in a fire and the insurance company pays $34,500 cash to settle the loss claim.

• 1

  Record the sale of the used machine for $24,000 cash.

• 2

  Record the sale of the used machine for $96,000 cash.

• 3

  Record the insurance settlement received of $34,500 resulting from the total destruction of the machine in a fire.