Reference no: EM132472669
Problem - Onslow Co. purchased a used machine for $288,000 cash on January 2. On January 3, Onslow paid $8,000 to wire electricity to the machine and an additional $1,600 to secure it in place. The machine will be used for six years and have a $34,560 salvage value. Straight-line depreciation is used. On December 31, at the end of its fifth year in operations, it is disposed of.
Required - Prepare journal entries to record the machine's disposal under each separate situation: (a) it is sold for $24,000 cash; (b) it is sold for $96,000 cash; and (c) it is destroyed in a fire and the insurance company pays $34,500 cash to settle the loss claim.
1. Record the sale of the used machine for 24,000 cash.
2. Record the sale of the used machine for 96,000 cash.
3. Record the insurance settlement received of 34,500 resulting from the total destruction of the machine on a fire.
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