Homework Answers
1. Following costs are necessary to bring the assets in the condition and location of its intended use:
Purchase cost = $ 70,000
Sales Tax cost = $ 5,600
Shipping and handling = $ 6,200
Installation and preparation = $12,700
Testing and safety inspection = $ 8,400
Total cost = $102,900.
2. Cost related to operating the equipment:
Employee training for operation =$ 5,500
Maintenance for the first month of operation = $ 1,600
Total = $ 7,100.
3. Journal:
(i)
Equipment A/c Dr. $102,900
Cash A/c Cr. $102,900
(ii)
Employee Training Expenses Dr. $5,500
Cash A/c Cr. $5,500
(iii)
Repairs and Maintenance A/c Dr. $ 1,600
Cash A/c. Cr. $1,600.
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