Saturn Co. purchases a used machine for $192,000 cash on January2 and readies it for use the next day at an $6,000 cost. On January3, it is installed on a required operating platform costing $1,200,and it is further readied for operations. The company predicts themachine will be used for six years and have a $23,040 salvagevalue. Depreciation is to be charged on a straight-line basis. OnDecember 31, at the end of its fifth year in operations, it isdisposed of.
Required: 1. Prepare journal entries to record the machine's purchase and thecosts to ready and install it. Cash is paid for all costs incurred.(Omit the "$" sign in your response.)
2. Prepare journal entries to record depreciation of the machine atDecember 31. (Omit the "$" sign in yourresponse.)
(a) Its first year in operations.
(b) The year of its disposal.
3. Prepare journal entries to record the machineâs disposal undereach of the following separate assumptions (Omit the "$"sign in your response):
(a) It is sold for $24,000 cash.
(b) It is sold for $96,000 cash.
(c) It is destroyed in a fire andthe insurance company pays $34,500 cash to settle the lossclaim.
| Saturn Co. purchases a used machine for $192,000 cash on January2 and readies it for use the next day at an $6,000 cost. On January3, it is installed on a required operating platform costing $1,200,and it is further readied for operations. The company predicts themachine will be used for six years and have a $23,040 salvagevalue. Depreciation is to be charged on a straight-line basis. OnDecember 31, at the end of its fifth year in operations, it isdisposed of.
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