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ACc - Saturn Co.

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Saturn Co. purchases a used machine for $288,000 cash on January 2 and readies it for use the next day at an $8,000 cost. On January 3, it is installed on a required operating platform costing $1,600, and it is further readied for operations. The company predicts the machine will be used for six years and have a $34,560 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 depreciation of the machine at December 31.;(a) Its first year in operations.;(b) The year of its disposal.;Prepare journal entries to record the machine?s disposal under each of the following separate assumptions;(a) It is sold for $20,500 cash.;Prepare journal entries to record the machine?s disposal under each of the following separate assumptions;(a) It is sold for $20,500 cash.;(b) It is sold for $82,000 cash.;(c) It is destroyed in a fire and the insurance company pays $31,000 cash to settle the loss claim.

 

Paper#81115 | Written in 18-Jul-2015

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