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Orion Flour Mills purchased a new machine and made the following expenditures: Purchase price $ 69,000...

Orion Flour Mills purchased a new machine and made the following expenditures:

Purchase price $ 69,000
Sales tax 5,700
Shipment of machine 940
Insurance on the machine for the first year 640
Installation of machine 1,880

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.)

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Homework Answers

Answer #1

Answer:

Journal Entries

Date Account Titles Debit Credit
Equipment $77520
Prepaid Insurance $640
  Cash Account $3460
  Accounts Payables $74700

Note:

Computation of cost of the machine

Purchase Price $69000
Sales tax $5700
Shipment of machine $940
Installation of machine $1880
Total cost of the machine $77520

The amount of the insurance for machine is not to be capitalized

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