APPLY THE CONCEPTS: Measure and record the purchase of a fixed asset

On January 1, 2011, Input Outzone Inc. acquired a new piece of machinery and a used truck from Acme Equipment Company. Input Outzone negotiated a price of $108,000 for both items. The fair market value of the equipment was $112,500, and the fair market value of the truck was $37,500. Input Outzone Inc. signed a note with Acme to make the purchase.

Prepare the journal entry to record the purchase of the equipment. Use Smart Entry when selection lists are not available to enter the account title in the Description column.

GENERAL JOURNAL

page

DATE

ACCOUNT TITLE

DOC. NO.

POST. REF.

DEBIT

CREDIT

1

Jan. 1

1

2

2

3

3