Required information Problem 10-6A Disposal of plant assets LO C1, P1, P2 [The following information applies to the questions displayed below.) Onslow Co. purchases a used machine for $192,000 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 $23,040 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 1 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. View transaction list Journal entry worksheet Record the purchase of a used machine for $192,000 cash. Note: Enter debits before credits. General Journal Debit Credit Date Jan 02 Record entry View general journal Clear entry Journal entry worksheet Record the costs of $10,000 incurred on the used machine. Note: Enter debits before credits. General Journal Debit Credit Date Jan 03 Record entry View general journal Clear entry Journal entry worksheet Record the first year year-end adjusting entry for the depreciation expense of the used machine. Note: Enter debits before credits. General Journal Debit Credit Date Dec 31 Record entry View general journal Clear entry Journal entry worksheet Record the year of disposal year-end adjusting entry for the depreciation expense of the used machine. Note: Enter debits before credits. General Journal Debit Credit Date Dec 31 Record entry View general journal Clear entry 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. View transaction list Journal entry worksheet Record the sale of the used machine for $22,000 cash. Note: Enter debits before credits. General Journal Debit Credit Date Dec 31 Record entry View general journal Clear entry 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. View transaction list Journal entry worksheet Record the sale of the used machine for $88,000 cash. Note: Enter debits before credits. General Journal Debit Credit Date Dec. 31 Record entry View general journal Clear entry 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. View transaction list Journal entry worksheet Record the insurance settlement received of $32,500 resulting from the total destruction of the machine in a fire. Note: Enter debits before credits. General Journal Debit Credit Date Dec 31 Record entry View general journal Clear entry
