Onslow Co. purchased a used machine for $288,000 cash on January 2. On January 3, Onslow paid $10,000 to wire electricity to the machine and an additional $2,000 to secure it in place. 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.

Required information Problem 8-6A (Algo) Disposal of plant assets LO C1, P1, P2 (The following information applies to the questions displayed below.) Onslow Co. purchased a used machine for $288,000 cash on January 2. On January 3, Onslow paid $10,000 to wire electricity to the machine and an additional $2,000 to secure it in place. 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 3 3. Prepare journal entries to record the machine's disposal under each separate situation: (a) it is sold for $21,500 cash and (b) it is sold for $86,000 cash. No Date General Journal Debit Credit 1 Dec 31 21,500 Cash Accumulated depreciationMachinery Loss on sale of machinery Machinery 253,440 X 25,060 X 300,000 2 Dec 31 86.000 253,440 X Cash Accumulated depreciation Machinery Gain on sale of machinery Machinery 46,560 X 300,000