Accounting for the Acquisition of a Long-Term Asset

Action Jackson Company acquired a new machine in order to expand its productive capacity. The costs associated with the machine purchase were as follows:

Purchase price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $25,000 Installation costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 750 Cost of initial testing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 900 Sales tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,563

1. Make the journal entry to record the acquisition of the machine. Assume that all costs were paid in cash.

2. Make the journal entry to record the acquisition of the machine. Assume that Action Jackson signed a note payable for the $25,000 purchase price and paid the remaining costs in cash.