Onslow Co. purchases a used machine for $144,000 cash on January 2 and readies it for use the next day at a $6,000 cost. On January 3, it is installed on a required operating platform costing $1,200, and it is further readied for operations. The company predicts the machine will be used for six years and have a $17,280 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. Prepare journal entries to record the machines purchase and the costs to ready and install it. Cash is paid for all costs incurred. Record the costs of $6,000 incurred on the used machine. Journal entry worksheet Record the cost of $1,200 for an operating platform.
| Total cost of machine purchased: | ||||||||||
| Purchase cost of Machine: | 144000 | |||||||||
| Add: cost of making ready to use | 6000 | |||||||||
| Add: cost of operating platform | 1200 | |||||||||
| Total cost of machine purchased: | 151200 | |||||||||
| Journal entries for machine: | ||||||||||
| Date | Accounts title and explanation | Debit $ | Credit $ | |||||||
| 1-Jan | Machine equipment Dr. | 144000 | ||||||||
| Cash account | 144000 | |||||||||
| 2-Jan | Machine equipment Dr. | 6000 | ||||||||
| Cash account | 6000 | |||||||||
| 3-Jan | Machine equipment Dr. | 1200 | ||||||||
| Cash account | 1200 | |||||||||
| Note: Cost incurred for making the machine ready to use and begin production shall be added in cost of machine. | ||||||||||
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