Question

Onslow Co. purchased a used machine for $192,000 cash on January 2. On January 3, Onslow paid $8,000 to wire electricity to the machine and an additional $1,600 to secure it in place. 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.Prepare journal entries to record the machine's purchase and the costs to ready and install it.

Answer 1

Answer:

Journal entries will be as follows;

Explanation:

1.The machine purchased is an asset so machinery a/c will be debited.

The cash used to purchase the machine is an outflow so it's credited on the cash a/c

2. Electricity wiring on the machine is part of the acquisition cost, hence we debit machinery account and the cash paid for that is credited on cash a/c

3. Cost of securing it in place is also an operating cost hence you debit machinery a/c and credit the cash used to pay for it in the cash a/c

Journal entries

1. Machinery account Dr      192,000

Cash account Cr                                        192,000

2.Machinery account Dr       8,000

  Cash account Cr                                           8,000

3.Machinery account Dr       1,600

  Cash account Cr                                           1,600