Question
E9-1 The following expenditures relating to plant assets were made by Watkens Company during the first 2 months of 2014. Paid $7,000 of accrued taxes
E9-1
The following expenditures relating to plant assets were made by Watkens Company during the first 2 months of 2014.
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Paid $7,000 of accrued taxes at the time the plant site was acquired.
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Paid $200 insurance to cover a possible accident loss on new factory machinery while the machinery was in transit.
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Paid $850 sales taxes on a new delivery truck.
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Paid $21,000 for parking lots and driveways on the new plant site.
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Paid $250 to have the company name and slogan painted on the new delivery truck.
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Paid $8,000 for installation of new factory machinery.
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Paid $900 for a 1-year accident insurance policy on the new delivery truck.
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Paid $75 motor vehicle license fee on the new truck.
Instructions:
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Explain the application of the historical cost principle in determining the acquisition cost of plant assets.
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List the numbers of the transactions, and opposite each indicate the account title to which each expenditure should be debited.
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