Question

Mason Brewing sells craft beer and runs a brewery academy offering brewing lessons in
Vancouver. On June 30th, 2018, Mason Brewing purchased a new Copper Kettle to brew
a special new micro-brew.
Mason brewing incurred the following costs:
1) The final invoice price for the copper kettle was $ 35,340
2) Due to it's unusual size, shipping costs of $ 830 were incurred
3) Mason Brewing purchased a one year insurance policy costing $ 2,800 to mitigate risk
4) Mason brewing hired specialists from the supplier to complete installation of the kettle for $ 630
5) To ensure quality from the very first batch, Mason brewing spent $ 1,200 testing the equipment
Mason brewing estimates they can use the new copper kettle for 10 years, at which time they could
probably sell it to a discount brewery for $ 3,000 . They also expect to use the kettle to brew
approximately 900,000 litres of beer.
Required:
1) Record the entries for the costs incurred on June 30th, 2018 to acquire the Copper Kettle. Assume
all costs were paid in cash.

Answer 1

Accounting entries as per 30th June,2018

The Cost of the asset including all the cost would be

Copper Kettle Invoice price: $35,340

Shipping Cost : $830

Insurance Policy: $2,800

Installation Charge: $630

Testing Charge: $1,200

Total Cost: $35,340+$830+$2,800+$630+$1,200=$40,800

All expenses paid in cash. So the journal entry will be

Copper Kettle A/c..Dr. $40,800

To, Cash A/c    $40,800

Depreciation of the asset:

Useful Life 10 years that's mean the asset will be expire after 10 years.

So the cost spread in 10 years will be ($40,800/10)=$4,080

When accumulated depreciation amount reaches $40,800, the full value of your table has been realized.

Depreciation A/c.....Dr. $4,080

To Accumulated Depreciation $4,080

Sell value of $3,000 will not be incurred on 30th June,2018 so the amount and the entries is not incurred.