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

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Onslow Company purchased a used machine for $144,000 cash on January 2. On January 3, Onslow paid $6,000 to wire electricity to the machine. Onslow paid an additional $1,200 on January 4 to secure the machine for operation. The machine will be used for six years and have a $17,280 salvage value. Straight-line depreciation is used. On December 31, at the end of its fifth year in operations, it is disposed of.

Problem 10-6A (Algo) Part 1

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.

Problem 10-6A (Algo) Part 2

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

Problem 10-6A (Algo) Part 3

3. Prepare journal entries to record the machines disposal under each separate situation: (a) it is sold for $23,000 cash and (b) it is sold for $92,000 cash.