Sheridan Enterprises purchased a new piece of equipment for its factory under a new government incentive program in exchange for cash. The equipment cost $$147,000$ and had an estimated useful life of ten years. The program was intended to encourage companies to invest in new, innovative technologies. The new piece of equipment purchased by Sheridan qualified for a government grant of $$20,600.$ Sheridan collected the grant after providing proof of the purchase.

Assuming that Sheridan uses the cost reduction method, prepare the journal entries to record the purchase of the equipment and the receipt of the government grant. $($Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select $"$No Entry" for the account titles and enter $0$ for the amounts. List all debit entries before credit entries.$)$

Account Titles and Explanation

Debit

Credit

enter an account title to record purchase of equipment

enter a debit amount

enter a credit amount

enter an account title to record purchase of equipment

enter a debit amount

enter a credit amount

$($To record purchase of equipment$)$

enter an account title to record collection of government grant

enter a debit amount

enter a credit amount

enter an account title to record collection of government grant

enter a debit amount

enter a credit amount

$($To record collection of government grant$)$

Question Part Score$--/8$

Assuming that Sheridan uses the deferral method, prepare the journal entries to record the purchase of the equipment, the receipt of the grant, and the adjusting entry for the grant required at the end of the first year $($assuming the equipment was purchased on the first day of the fiscal year$).($Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select $"$No Entry" for the account titles and enter $0$ for the amounts. List all debit entries before credit entries.$)$

Account Titles and Explanation

Debit

Credit

enter an account title to record purchase of equipment

enter a debit amount

enter a credit amount

enter an account title to record purchase of equipment

enter a debit amount

enter a credit amount

$($To record purchase of equipment$)$

enter an account title to record collection of government grant

enter a debit amount

enter a credit amount

enter an account title to record collection of government grant

enter a debit amount

enter a credit amount

$($To record collection of government grant$)$

enter an account title to record year end adjusting entry

enter a debit amount

enter a credit amount

enter an account title to record year end adjusting entry

enter a debit amount

enter a credit amount

$($To record year end adjusting entry$)$