Question

Vita Water purchased a used machine for $122,300 on January 2, 2020. It was repaired the next day at a cost of $10,038 and installed on a new platform that cost $1.662. The company predicted that the machine would be used for six years and would then have a $24.320 residual value. Depreciation was to be charged on a straight line basis to the nearest whole month. A full year's depreciation was recorded on December 31, 2020. On September 30, 2025, it was retired. Required: 1. Prepare journal entries to record the purchase of the machine, the cost of repairing it, and the installation. Assume that cash was paid. View transaction list Journal entry worksheet Record purchase of machine. Note: Enter debits before credits Date General Journal Debit Credit Jan 02, 2020

Answer 1

Credit ($) Journal No. Date Account Titles and Explanation 2-Jan Machine Cash (To record the purchase of machine) Debit ($) 122,300 122,300 10,038 3-Jan Machine Cash (To record the capital repair of machine) 10,038 1,662 3-Jan Machine Cash (To record the capital installation of machine) 1,662 Explanation: Major rapair done on machine initially to improve its life or make it usuable just after puchase should be capitalized. Thus is is added to the cost of the asset. Installation charge is a one time expense paid at the time of installing the asset. Thus it should be capitalized. Please give as many likes for the hard work.