Problem 10-6A Disposal of plant assets LO C1, P1, P2

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Onslow Co. purchases a used machine for $144,000 cash on January 2 and readies it for use the next day at a $10,000 cost. On January 3, it is installed on a required operating platform costing $2,000, and it is further readied for operations. The company predicts the machine will be used for six years and have a $17,280 salvage value. Depreciation is to be charged on a straight-line basis. On December 31, at the end of its fifth year in operations, it is disposed of.

Problem 10-6A Part 3

3. Prepare journal entries to record the machine's disposal under each of the following separate assumptions:

1. Record the sale of the used machine for $22,000 cash.
2. Record the sale of the used machine for $88,000 cash.
3. Record the insurance settlement received of $32,500 resulting from the total destruction of the machine in a fire.