Question

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On January 2, 2015, Summers Company bought a machine for use in operations. The machine has an estimated useful life of eight years and an estimated residual value of $4,400. The company provided the following expenditures:

a.	Invoice price of the machine, $103,000.
b.	Freight paid by the vendor per sales agreement, $2,900.
c.	Installation costs, $3,100 paid in cash.
d.	Payment was made as follows:
	On January 2:
	• The installation costs were paid in cash.
	• Summers Company common stock, par $1; 4,000 shares (market value, $1.50 per share).
	• Note payable, $62,000; 10.5 percent due April 16, 2015 (principal plus interest).
	• Balance of invoice price to be paid in cash. The invoice allows for a 5 percent discount for cash paid by    January 12.
	On January 15:
	• Summers Company paid the balance due.

Required: 2. Record the purchase on January 2 and the subsequent payment on January 15. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 1 2 Record the purchase of equipment. Note: Enter debits before credits. General Journal Date Debit Credit January 02 Record entry View general journal Clear entry Required: 2. Record the purchase on January 2 and the subsequent payment on January 15. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 1 2 Record the balance paid from the January 2 purchase. Note: Enter debits before credits. Date General Journal Debit Credit January 15 Record entry Clear entry View general journal

Answer 1

Record the purchase of equipment.
Date	General Journal	Debit	Credit
Jan. 02	Equipment (3100 + 4000 + 2000 + 62000 + 33250)	104350
	Cash		3100
	Common Stock (4,000 x $1)		4000
	Additional Paid-in Capital (4,000 x $0.50)		2000
	Note Payable		62000
	Accounts Payable		33250
Record the balance paid from the January 2 purchase.
Date	General Journal	Debit	Credit
Jan. 15	Accounts Payable	33250
	Finance Charge (33250/0.95) x 0.05	1750
	Cash		35000