Question

Orion Flour Mills purchased a new machine and made the following expenditures: $68,000 5,650 Purchase price Sales tax Shipment of machine Insurance on the machine for the first year 930 630 Installation of machine 1,860 The machine, including sales tax, was purchased on account, with payment due in 30 days. The other expenditures listed above were paid in cash. Required: Record the above expenditures for the new machine. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet

Answer 1

WORKING NOTES:
	CALCULATION OF COST OF MACHINE
	Purchase Price	$                  68,000
	Sales Tax	$                     5,650
	Shipment of machine	$                        930
	Installantion of machine	$                     1,860
	Total Cost of Machine	$                  76,440
	Less: Paid in cash
	Shipment of machine	$                        930
	Installantion of machine	$                     1,860
	Balance Payable after 30 Days or purhcase on credit	$                  73,650
SOLUTION :
Journal Entries
Date	Account Title and explanation	Debit	Credit
--------	Machine	$                  76,440
	Account Payable		$                     73,650
	Cash		$                           930