Answered: Vita Water purchased a used machine for $117,200 on January 2, 2020. It was repaired the next day at a cost of $4,900 and installed on a new platform that cost…

Name: Vita Water purchased a used machine for $117,200 on January 2, 2020. I
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Description: Vita Water purchased a used machine for $117,200 on January 2, 2020. It was repaired the next day at a cost of $4,900 and installed on a new platform that cost $1,700. The company predicted that the machine would be used for six years and would then

FINANCIAL ACCOUNTING

10th Edition

ISBN: 9781259964947

Author: Libby

Publisher: MCG

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^{Vita Water purchased a used machine for $117,200 on January 2, 2020. It was repaired the next day at a cost of $4,900 and installed on a new platform that cost $1,700. The company predicted that the machine would be used for six years and would then have a $32,720 residual value. Depreciation was to be charged on a straight-line basis to the nearest whole month. A full year’s depreciation was recorded on December 31, 2020. On September 30, 2025, it was retired.}

^{Required:
1. Prepare journal entries to record the purchase of the machine, the cost of repairing it, and the installation. Assume that cash was paid.}

^{2. Prepare entries to record depreciation on the machine on December 31 of its first year and on September 30 in the year of its disposal. (Round intermediate calculations to the nearest whole dollar.)}

^{3. Prepare entries to record the retirement of the machine under each of the following unrelated assumptions:}
^{a. It was sold for $35,000.}
^{b. It was sold for $38,000.}
^{c. It was destroyed in a fire and the insurance company paid $38,000 in full settlement of the loss claim.}

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