Onslow Company purchased a used machine for $192,000 cash on January 2. On January 3, Onslow paid $6,000 to w 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 $23,040 salvage value. Straight-line depreciation is used. On December 3 at the end of its fifth year in operations, it is disposed of. Problem 8-6A (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.
Onslow Company purchased a used machine for $192,000 cash on January 2. On January 3, Onslow paid $6,000 to w 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 $23,040 salvage value. Straight-line depreciation is used. On December 3 at the end of its fifth year in operations, it is disposed of. Problem 8-6A (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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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Transcribed Image Text:Problem 8-6A (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.
No
1
2
3
Date
January 02
January 03
January 04
Machinery
Cash
Machinery
Cash
Answer is complete but not entirely correct.
General Journal
Accumulated depreciation-Machinery
Cash
Debit
192,000
6,000
88,000
Credit
192,000
6,000
1,200
![Required information
Problem 8-6A (Algo) Disposal of plant assets LO C1, P1, P2
[The following information applies to the questions displayed below.]
Onslow Company purchased a used machine for $192,000 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 $23,040 salvage value. Straight-line depreciation is used. On December 31,
at the end of its fifth year in operations, it is disposed of.
Problem 8-6A (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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4628a3e0-e47d-45a5-9da4-63b4693574a3%2F7cc2f3ce-be76-45e1-a1eb-b5678d61b3ce%2Fz1ss02k_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information
Problem 8-6A (Algo) Disposal of plant assets LO C1, P1, P2
[The following information applies to the questions displayed below.]
Onslow Company purchased a used machine for $192,000 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 $23,040 salvage value. Straight-line depreciation is used. On December 31,
at the end of its fifth year in operations, it is disposed of.
Problem 8-6A (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.
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