Question

Conover Corp. ordered a machine on January 1, 2017, at a purchase price of $31,470. On delivery, January 2, 2017, the company paid $8,300 on the machine and signed a note payable for the balance. On January 3, 2017, it paid $280 for freight on the machine. On January 5, Conover paid installation costs relating to the machine amounting to $1,650. On December 31, 2017 (the end of the accounting period), Conover recorded depreciation on the machine using the straight-line method with an estimated useful life of ten years and an estimated residual value of $2,900. Required: 1. Indicate the effects (accounts, amounts) of each transaction (on January 1, 2, 3, and 5) on the accounting equation. Use the following schedule: (Enter any decreases to accounts with a minus sign.) Assets Liabilities Stockholders' Equity Date Jan. 1 Jan. 2 Jan. 3 Jan. 5

Answer 1

* concoves corp. TReal 1 Indicate the effect Date + Stockholdes's Equi- Liabilities Jani Jan 2 Asset no effect cash Equipment cash Equipment cash Equipment - 8300 $31470 No repayable 23,170 -280 +280 Jan3 Jons 1650 1650 Rea:2 Acauistion cost $ 33400 31470 280 machine cost faeight cost Installation cost Acquistion cost. 1650 $ 33400 Rea 3 Depreciation $2857 Dep. Expense = (cost - salvage value) & Expected life = ($ 31470 - 2900) = 10 yea $2857 pes yeas

Reg. 4 BOOK value $25,756 I .. cost – 2017 Dep - 2018 DeP s 31470 - 2857 – 2857 - s 25,7561