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 $288,000 cash on January 2 and readies it for use the next day at a $8,000 cost. On January 3, it is installed on a required operating platform costing $1,600, and it is further readied for operations. The company predicts the machine will be used for six years and have a $34,560 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. oblem 10-6A Part 3 Prepare journal entries to record the machine's disposal under each of the following separate assumptions: $21,000 sh. 1. Record the sale of the used machine 2. Record the sale of the used machine for $84,000 cash. 3. Record the insurance settlement received of $31,500 resulting from the total destruction of the machine in a fire.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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**Educational Website Transcription:**

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### 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 $288,000 cash on January 2 and readies it for use the next day at an $8,000 cost. On January 3, it is installed on a required operating platform costing $1,600, and it is further readied for operations. The company predicts the machine will be used for six years and have a $34,560 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 $21,000 cash.
   2. Record the sale of the used machine for $84,000 cash.
   3. Record the insurance settlement received of $31,500 resulting from the total destruction of the machine in a fire.

### Journal Entry Table

**Table Detail:**
- The table is incomplete and meant for recording journal entries associated with the disposal of the machinery.
- Key information to be recorded includes the date (December 31), along with the debit and credit amounts for the transactions based on the assumptions given (sale or insurance settlement).

---
Transcribed Image Text:**Educational Website Transcription:** --- ### 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 $288,000 cash on January 2 and readies it for use the next day at an $8,000 cost. On January 3, it is installed on a required operating platform costing $1,600, and it is further readied for operations. The company predicts the machine will be used for six years and have a $34,560 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 $21,000 cash. 2. Record the sale of the used machine for $84,000 cash. 3. Record the insurance settlement received of $31,500 resulting from the total destruction of the machine in a fire. ### Journal Entry Table **Table Detail:** - The table is incomplete and meant for recording journal entries associated with the disposal of the machinery. - Key information to be recorded includes the date (December 31), along with the debit and credit amounts for the transactions based on the assumptions given (sale or insurance settlement). ---
**Journal Entries**

**1. Record the sale of the used machine for $21,000 cash.**

| No | Date   | General Journal                         | Debit  | Credit   |
|----|--------|-----------------------------------------|--------|----------|
| 1  | Dec 31 | Accumulated depreciation—Machinery      | 21,000 |          |
|    |        | Accumulated depreciation—Machinery      | 219,200|          |
|    |        | Loss on sale of machinery               |        | 57,000   |
|    |        | Machinery                               |        | 297,200  |

**2. Record the sale of the used machine for $84,000 cash.**

| No | Date   | General Journal                         | Debit  | Credit   |
|----|--------|-----------------------------------------|--------|----------|
| 2  | Dec 31 | Cash                                    | 84,000 |          |
|    |        | Accumulated depreciation—Machinery      | 219,200|          |
|    |        | Machinery                               |        | 297,600  |
|    |        | Gain on sale of machinery               | 560    |          |

**3. Record the insurance settlement received of $31,500 resulting from the total destruction of the machine in a fire.**

| No | Date   | General Journal                         | Debit  | Credit   |
|----|--------|-----------------------------------------|--------|----------|
| 3  | Dec 31 | Cash                                    | 31,500 |          |
|    |        | Accumulated depreciation—Machinery      | 219,200|          |
|    |        | Loss from fire                          |        | 46,500   |
|    |        | Machinery                               |        | 297,200  |
Transcribed Image Text:**Journal Entries** **1. Record the sale of the used machine for $21,000 cash.** | No | Date | General Journal | Debit | Credit | |----|--------|-----------------------------------------|--------|----------| | 1 | Dec 31 | Accumulated depreciation—Machinery | 21,000 | | | | | Accumulated depreciation—Machinery | 219,200| | | | | Loss on sale of machinery | | 57,000 | | | | Machinery | | 297,200 | **2. Record the sale of the used machine for $84,000 cash.** | No | Date | General Journal | Debit | Credit | |----|--------|-----------------------------------------|--------|----------| | 2 | Dec 31 | Cash | 84,000 | | | | | Accumulated depreciation—Machinery | 219,200| | | | | Machinery | | 297,600 | | | | Gain on sale of machinery | 560 | | **3. Record the insurance settlement received of $31,500 resulting from the total destruction of the machine in a fire.** | No | Date | General Journal | Debit | Credit | |----|--------|-----------------------------------------|--------|----------| | 3 | Dec 31 | Cash | 31,500 | | | | | Accumulated depreciation—Machinery | 219,200| | | | | Loss from fire | | 46,500 | | | | Machinery | | 297,200 |
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