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View Full Version : P10-3A On January 1, 2006, Solomon Company purchased the following two machines for you


faljadidi01
Jun 20, 2008, 09:45 AM
P10-3A On January 1, 2006, Solomon Company purchased the following two machines for use in its production process.

Machine A: The cash price of this machine was $38,500. Related expenditures included:
Sales tax $2,200, shipping costs $175, insurance during shipping $75, installation and testing costs $50, and $90 of oil and lubricants to be used with the machinery during its first year of operation. Solomon estimates that the useful life of the machine is 4 years with a $5,000 salvage value remaining at the end of that time.

Machine B: The recorded cost of this machine was $100,000. Solomon estimates that the useful life of the machine is 4 years with a $8,000 salvage value remaining at the end of that time.

morgaine300
Jun 20, 2008, 08:20 PM
What about them?

laial
Jun 21, 2008, 10:15 AM
Do I add oil and lubricants to be used with the machinery during its first year of operation to the cost?

laial
Jun 21, 2008, 10:22 AM
Oil and lubricants to be used with the machinery during its first year of operation , do I add it to the cost?

jeannawaller
Nov 17, 2008, 09:21 PM
Do the math

jeannawaller
Nov 17, 2008, 09:28 PM
(a)
Date Accounts and Explanations Debit Credit
Jan 1 Cash 15,000.00
Notes Payable 15,000.00

5 Cash 10,400.00
Sales 10,000.00
Sales Tax Payable 400.00

12 Unearned Service Revenue 9,000.00
Service Revenue 9,000.00

14 Sales Tax Payable 5,800.00
Cash 5,800.00

20 Accounts Receivable 37,856.00
Sales 36,400.00
Sales Tax Payable 1,456.00

25 Cash 12,480.00
Sales 12,000.00
Sales Tax Payable 480.00

(b) 1

Jan 31 Interest Expense 100.00
Interest Payable 100.00

(b) 2
Jan 31 Warranty Expense 1,820.00
Warranty Provision 1,820.00

(c)
Current Liabilities
Notes Payable 15,000.00
Accounts Payable 42,500.00
Unearned Service Revenue 6,000.00
Warranty Provision 1,820.00
Sales Tax Payable 2,336.00
Interest Payable 100.00
Total Current Liabilities 67,756.00