Southwest Milling Company purchased a front-end loader to move stacks of lumber. The loader had a list price of $124,630. The seller agreed to allow a 5.50 percent discount because Southwest Milling paid cash. Delivery terms were FOB shipping point. Freight cost amounted to $2,890. Southwest Milling had to hire a specialist to calibrate the loader. The specialist's fee was $870. The loader operator is paid an annual salary of $13,650. The cost of the company's theft insurance policy increased by $2,410 per year as a result of acquiring the loader. The loader had a four-year useful life and an expected salvage value of $5,400.

Required

1. Determine the amount to be capitalized in an asset account for the purchase of the loader.
2. Record the purchase in general journal format.