Question

Company purchased equipment on June 1 for $90,000, paying $20,000 cash Valdosta Garment Company purchased equipment on June and sianina a 9%, 2-month note for the remaining $70,000 balance The for the remaining $70,000 balance. The equipment is expected nrariate $18 000 each year. Valdosta Garment company prepares monthly financial statements. Instructions tal Prepare the general lournal entry to record the acquisition of the equipment on (b) Prepare the 2 adjusting journal entries that should be made on June 30th Il Show how the equipment will be reflected in the PPE section of valdosta Garmend Company's balance sheet on June 30th.

Answer 1

--Requirement [a]

Date	Accounts title	Debit	Credit
01-Jun	Equipment	$90,000
	Cash		$20,000
	Notes Payable		$70,000
	(to record purchase of equipment)

--Requirement [b]

Date	Accounts title	Debit	Credit
30-Jun	Interest Expense ($70000 x 9% x 1/12)	$525
	Interest Payable		$525
	(to record accrued interest for 1 month)
30-Jun	Depreciation expense - Equipment ($18000 x 1/12)	$1,500
	Accumulated Depreciation - Equipment		$1,500
	(to record 1 month depreciation)

--Requirement [c]

Balance Sheet
at June 30
ASSETS
Property, Plant & Equipment (PPE):
Equipment	$90,000
Less: Accumulated Depreciation - Equipment	$1,500	$88,500