Onslow Co. purchases a used machine for $240,000 cash on January 2 and prepares it for use the next day at a cost of $8,000. On January 3, it is installed on a required operating platform costing $1,600 and prepared for the operations. The company predicts the machine will be used for six years and have a salvage value of $28,800. Depreciation will be charged on a straight line basis. On December 31, at the end of its fifth year of operations, it is sold.

Required:

1. Prepare journal entries to record the purchase of the machine and the costs to set it up and install it. Cash is paid for all costs incurred.

Entry #1 (January 2) Records the purchase of a used machine for $240,000 in cash.

Entry #2 (January 3) Record the 8,000 cash costs incurred on the used machine

Entry #3 (January 3) Record the cost of $1,600 for an operating platform.

2. Prepare journal entries to record the depreciation of the machine as of December 31.

(a) its first year in operation.

Entry #1 (December 31) Record the year-end adjusting entry for the depreciation expense of the used machine.

(b) The year of its disposal.

Entry #1 (December 31) Record the year-end adjusting entry for the depreciation expense of the used machine.

3. Prepare journal entries to record the disposition of the machine under each of the following assumptions separately:

(a) It is sold for $20,000 cash.

Entry #1 (December 31) Record the sale of the used machine for $20,000 cash.

(b) Sold for $80,000 cash

Entry #1 (December 31) Record the sale of the used machine for $80,000 cash.

(c) is destroyed in a fire and the insurance company pays $30,500 in cash to settle the claim for loss.

Entry #1 (December 31) Record of destruction of machine used in fire with $30,500 cash insurance settlement.