Question

Onslow Co. purchased a used machine for $288,000 cash on January 2. On January 3, Onslow paid $6,000 to wire electricity to the machine and an additional $1,200 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. 2. Prepare journal entries to record depreciation of the machine at December 31

Answer 1

No. Date General Debit credit 1 Dec. 31 $43,440 I General Journal Depreciation expense - Machinery Accumulated Depreciation - Machinery (To record depreciation in its first year of operations) $43,440 uyo 2 Dec 31 Depreciation expense - Machinery $43,440 Accumulated Depreciation-Machinery (To record depreciation during the year of its disposal) calculation straight line depreciation Depreciation expense = cost of machinery - Saluage value - Useful life of machinery Cost of machinery = $280,000 + $6,000 + $1,200 = $295,00 Depreciation expense = ($295,200 - $34,560) 6 years - $260,640 - 6 years & $43,440 Depreciation expense same in every year in straight line method.