Southwest Milling Co. purchased a front-end loader to move stacks of lumber. The loader had a list price of $123,040. The seller agreed to allow a 6.00 percent discount because Southwest Milling paid cash. Delivery terms were FOB shipping point. Freight cost amounted to $2,570. Southwest Milling had to hire a specialist to calibrate the loader. The specialists fee was $1,050. The loader operator is paid an annual salary of $43,960. The cost of the companys theft insurance policy increased by $1,860 per year as a result of acquiring the loader. The loader had a four-year useful life and an expected salvage value of $13,900.

a.

Determine the amount to be capitalized in an asset account for the purchase of the loader.

b.

Record the purchase in general journal format.