The Grogan Manufacturing Company started business on January 1, 1977. At that time it acquired machine A
Question:
The Grogan Manufacturing Company started business on January 1, 1977. At that time it acquired machine A for \(\$ 20,000\), payment being made by check.
Due to an expansion in the volume of business, machine B, costing \(\$ 25,000\), was acquired on September 30, 1978. A check for \(\$ 15,000\) was issued, with the balance to be paid in annual installments of \(\$ 2,000\) plus interest at the rate of 6 percent on the unpaid balance. The first installment is due on September 30, 1979.
On June 30, 1979, machine A was sold for \(\$ 13,000\) and a larger model, machine C, was acquired for \(\$ 30,000\).
All installments are paid on time.
All machines have an estimated life of 10 years with an estimated salvage value equal to 10 percent of acquisition cost. The company closes its books on December 31. The straight-line method is used.
Prepare dated journal entries to record all transactions through December 31, 1979, including year-end adjustments but excluding closing entries.
Step by Step Answer:
Financial Accounting An Introduction To Concepts Methods And Uses
ISBN: 9780030452963
2nd Edition
Authors: Sidney Davidson, Roman L. Weil, Clyde P. Stickney