A hospital purchased a magnetic resonance imaging (MRO) machine. The cost of the machine was 1,200,000. Shipping and installation were 140,000. The unit is expected to last six years and has a salvage value of 500,000. The hospital will pay for the machine with a wire transfer in 30days.How should the hospital record the purchase of this new MRI machine?

1. Debit property, plant, and equipment (PPE) 700,000, credit accounts payable 700,000

2. Debit property, plant, and equipment (PPE) 1,200,000, credit accounts payable 1,200,000

3. Debit property, plant, and equipment (PPE) 1,200,000, credit cash 1,200,000

4. Debit property, plant, and equipment (PPE) 1,340,000, credit accounts payable 1,340,000