Question
OConnor Company ordered a machine on January 1, 2012, at a purchase price of $40,000. On the date of delivery, January 2, 2012, the company
OConnor Company ordered a machine on January 1, 2012, at a purchase price of $40,000. On the date of delivery, January 2, 2012, the company paid $10,000 on the machine and signed a Iong-term note payable for the balance. On January 3, 2012, it paid $350 for freight on the machine. On January 5, OConnor paid installation costs relating to the machine amounting to $2,400. On December 31, 2012 (the end of the accounting period), OConnor recorded depreciation on the machine using the straight-line method with an estimated useful life of 10 years and an estimated residual value of $4,750.
Required: | |||
1. | Indicate the effects (accounts, amounts, and + for increase, ? for decrease) of each transaction (on January 1, 2, 3, and 5) on the accounting equation. (Enter all amounts as positive values.) 2. Compute the acquisition cost of the machine. 3. Compute the depreciation expense to be reported for 2012. (Do not round intermediate calculations.)
|
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started