On January 2, 2021, Athol Company bought a machine for use in operations. The machine has...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
On January 2, 2021, Athol Company bought a machine for use in operations. The machine has an estimated useful life of eight years and an estimated residual value of $2,600. The company provided the following Information: a. Invoice price of the machine, $82,000. b. Freight paid by the vendor per sales agreement, $1,000. c. Installation costs, $2,400 cash. d. Cost of cleaning up the supplies, boxes, and other garbage that remained after the Installation of the machine, $100 cash. e. Payment of the machine's price was made as follows: January 2: Issued 2,000 common shares of Athol Company at $3.50 per share. Signed a $45,000 note payable due April 16, 2021, plus 8 percent interest. Balance of the Invoice price to be paid in cash. The Invoice allows for a 2 percent cash discount if the cash payment is made by January 11. January 15: Paid the balance of the Invoice price in cash. April 16: Paid the note payable and Interest in cash. f. On June 30, 2023, the company completed the replacement of a major part of the machine that cost $18,575. This expenditure is expected to reduce the machine's operating costs, Increase its estimated useful life by two years, and decrease its estimated residual value to $2,000. g. Assume that on October 1, 2028, the company decided to replace the machine with a newer, more efficient model. It then sold the machine to Sako Ltd. on that date for $30,000 cash. Required: 1. Compute the acquisition cost of the machine. Acquisition cost 2. Prepare the journal entries to record the purchase of the machine and subsequent cash payments on January 15 and April 16, 2021. (Do not round Intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" In the first account field.) View transaction list 1 Record purchase of machine by issuing shares, signing a note and the balance on account 2 Record payment of machine installation costs. 3 Record payment made after discount period. 4 Record payment of note and interest it balance 3. Compute the depreciation expense for each of the years 2021, 2022, and 2023, assuming the company's fiscal year ends on December 31. Use the straight-line depreciation method. (Do not round Intermediate calculations.) Depreciation expense 2021 2022 2023 4. Prepare the journal entry to record the sale of the machine on October 1, 2028. (Hint. First determine the balance of the accumulated depreciation account on that date.) (Do not round Intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" In the first account field.) View transaction list View journal entry worksheet Record sale of machinery. Debit 30,000 Credit 40,150 6,932 83,918 On January 2, 2021, Athol Company bought a machine for use in operations. The machine has an estimated useful life of eight years and an estimated residual value of $2,600. The company provided the following Information: a. Invoice price of the machine, $82,000. b. Freight paid by the vendor per sales agreement, $1,000. c. Installation costs, $2,400 cash. d. Cost of cleaning up the supplies, boxes, and other garbage that remained after the Installation of the machine, $100 cash. e. Payment of the machine's price was made as follows: January 2: Issued 2,000 common shares of Athol Company at $3.50 per share. Signed a $45,000 note payable due April 16, 2021, plus 8 percent interest. Balance of the Invoice price to be paid in cash. The Invoice allows for a 2 percent cash discount if the cash payment is made by January 11. January 15: Paid the balance of the Invoice price in cash. April 16: Paid the note payable and Interest in cash. f. On June 30, 2023, the company completed the replacement of a major part of the machine that cost $18,575. This expenditure is expected to reduce the machine's operating costs, Increase its estimated useful life by two years, and decrease its estimated residual value to $2,000. g. Assume that on October 1, 2028, the company decided to replace the machine with a newer, more efficient model. It then sold the machine to Sako Ltd. on that date for $30,000 cash. Required: 1. Compute the acquisition cost of the machine. Acquisition cost 2. Prepare the journal entries to record the purchase of the machine and subsequent cash payments on January 15 and April 16, 2021. (Do not round Intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" In the first account field.) View transaction list 1 Record purchase of machine by issuing shares, signing a note and the balance on account 2 Record payment of machine installation costs. 3 Record payment made after discount period. 4 Record payment of note and interest it balance 3. Compute the depreciation expense for each of the years 2021, 2022, and 2023, assuming the company's fiscal year ends on December 31. Use the straight-line depreciation method. (Do not round Intermediate calculations.) Depreciation expense 2021 2022 2023 4. Prepare the journal entry to record the sale of the machine on October 1, 2028. (Hint. First determine the balance of the accumulated depreciation account on that date.) (Do not round Intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" In the first account field.) View transaction list View journal entry worksheet Record sale of machinery. Debit 30,000 Credit 40,150 6,932 83,918
Expert Answer:
Related Book For
Financial Accounting
ISBN: 978-1259103285
5th Canadian edition
Authors: Robert Libby, Patricia Libby, Daniel Short, George Kanaan, M
Posted Date:
Students also viewed these accounting questions
-
On January 2, 2012, Athol Company bought a machine for use in operations. The machine has an estimated useful life of eight years and an estimated residual value of $ 2,600. The company provided the...
-
2) Use what you have learned about facility and work design to help Elon
-
Ishya is working on slide for her presentation about punctuality that she will share with her team next week. On the first slide she plans to use a quote from a famous politician about the importance...
-
i) Starbucks launched its prepaid (debit) Starbucks Card in November 2001. The card, which holds between $5 and $500 can be used at any Starbucks location. Suppose Starbucks management wants to study...
-
Show that the Midpoint method and the Modified Euler method give the same approximations to the initial-value problem y' = y + t + 1, 0 t 1, y(0) = 1, For any choice of h. Why is this true?
-
Benoit Company produces three products, A, B, and C. Data concerning the three products follows (per unit): Demand for the companys products is very strong, with far more orders each month than the...
-
Recognition of Service Contract Revenue} Zac Murphy is president of Blooming Colours Inc., which provides landscaping services in Leamington, Ontario. On November 20, 2018, Murphy signed a service...
-
Temptation Vacations issues $60 million in bonds on January 1, 2015, that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below: Required: 1....
-
The yield curve is flat at 4% per annum. What is the value of an FRA where the holder receives interest at the rate of 6% per annum for a six-month period on a principal of $1,000 starting in two...
-
David R. and Ella M. Cole (ages 39 and 38, respectively) are husband and wife who live at 1820 Elk Avenue, Denver, CO 80202. David is a self-employed consultant, specializing in retail management and...
-
Need processing code for these questions. ASSESSMENT: Assignment 3 DEPARTMENT AND COURSE NUMBER: COMP 1010 Q1: REPEATING BACKGROUND [3 MARKS] X Create an Active Processing program that will draw some...
-
Explain at least two state and federal acts on patient events reportable under the law
-
After finding the partial fraction decomposition, 9x2 18x - 11 -dx = (x + 5)(x-6) dx Notice you are NOT antidifferentiating...just give the decomposition.
-
The graph of the velocity of a car accelerating from rest to a speed of 60 km/h over a period of 30 seconds is shown. v (km/h) 60 60 40 40 20 20 t (seconds) 0 10 20 30 Use this graph and a midpoint...
-
House Addition : Congratulations: you're having a baby! You currently own and live in a small one-bedroom house. You have decided to construct an addition to your house before the baby arrives. The...
-
Bramble Corporation began operations on January 2 . ?Its year end is December 3 1 , ?and it adjusts its accounts annually. Selected transactions for the current year follow: On February 2 ,...
-
3 answers In connection with your examination of the financial statements of Martinson Inc. for the year ended December 31, your post-balance sheet date audit procedures disclosed the following items...
-
Borrowing costs should be recognised as an expense and charged to the profit and loss account of the period in which they are incurred : A. If the borrowing costs relate to qualifying asset B. If the...
-
Absorption and variable costing income statements (Learning Objective 7) (Appendix) Game Source manufactures video games, which it sells for \(\$ 40\) each. The company uses the FIFO inventory...
-
What will the Railway's operating income be if they sell 1,001 tickets in one month? a. \(\$ 50\) b. \(\$ 10\) c. \(\$ 60\) d. \(\$ 60,060\)
-
If the Grand Canyon Railway expects to serve 1,200 passengers next month, what is the margin of safety? a. 200 passengers b. 1,000 passengers c. 1,200 passengers d. 2,200 passengers
Study smarter with the SolutionInn App