Question
On 1 May 2020, Ron Trading purchased a new machine. The following payments relate to the machine. List price $21,500 Purchase discount 2,000 Transportation cost
On 1 May 2020, Ron Trading purchased a new machine. The following payments relate to the machine.
List price $21,500
Purchase discount 2,000
Transportation cost 300
Repair of damage parts incurred in transporting the machine 1,000
Fees paid to test the machine before use 500
Fees paid to the installer to install the machine 800
Machine operator's salary for the first month of operation 3,000
Maintenance costs for the first month of operation 300
(i) Identify and compute the cost of the machine to be recognised. Explain your reasoning
(ii)Journalise the transactions. Assume the above payments are paid in cash.
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