Problem 8-6A

Debit Credit

Jan. 2
Jan. 3
Jan. 3

a. First year

Dec. 31

b. Fifth year

Dec. 31

Accumulated depreciation at the date of disposal

Book value at the date of disposal

a. Sold for $15,000 cash Debit Credit

Dec. 31

b. Sold for $50,000 cash

Dec. 31

c. Destroyed in fire and collected $30,000 cash from insurance co.

Dec. 31

Onslow Co. purchases a used machine for $178,000 cash on January 2 and readies it for use the next day Problem 8-6A at an $2,840 cost. On January 3, it is installed on a required operating platform costing $1,160, and it is Disposal of plant assets further readied for operations. The company predicts the machine will be used for six years and have a C1 P1 P2 $14,000 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. Required 1. Prepare journal entries to record the machine's purchase and the costs to ready and install it. Cash is paid for all costs incurred. operations and (b) the year of its disposal. assumptions: (a) it is sold for $15,000 cash; (b) it is sold for $50,000 cash; and (c) it is destroyed in 2. Prepare journal entries to record depreciation of the machine at December 3l of (a) its first year in Check (2b) Depr. Exp, $28,000 3. Prepare journal entries to record the machine's disposal under each of the following separate (3c) Dr. Loss from Fire, $12,000 a fire and the insurance company pays $30,000 cash to settle the loss claim