View Full Version : Journal Entry
xexyanna16
Mar 5, 2009, 11:04 AM
Purchase price 45,000
Sales tax 2,000
Freight charges for shipment of machine 700
Insurance on the machine for the first year 900
Installation of machine 1,000
The machine including sales tax was purchased on open account, with payment due in 30 days. The other expenditures listed above were paid in cash.
How can I record the above expenditures in the journal entries??
codyman144
Mar 5, 2009, 12:56 PM
Again, give it a try for yourself and then we may help.
xexyanna16
Mar 6, 2009, 07:32 AM
Again, give it a try for yourself and then we may help.
I think your right I have to try first by myself ,but I don't know if this is right..
Purchase price-----------------------------------45,000
Sales tax------------------------------------------ 2,000
Freight charges for shipment of machine------- 700
Insurance on the machine for the first year---- 900
Installation of machine --------------------------1,000
Total:---------------------------------------------- 49,600
I record like this in the journal entry the above expenditures.Now the thing is that I don't know if I have to do something else with the sales tax??
Im right so far??
codyman144
Mar 6, 2009, 07:52 AM
Which amounts can you post to the asset (capital) account and which do you need to post to an expense. Also you have paid for some and others are not paid yet, this will change your offset.
Show your answer in Journal entry format. For example
Db Inventory 1000
Cr Cash 1000
xexyanna16
Mar 6, 2009, 08:27 AM
Which amounts can you post to the asset (capital) account and which do you need to post to an expense. Also you have paid for some and others are not paid yet, this will change your offset.
Show your answer in Journal entry format. For example
Db Inventory 1000
Cr Cash 1000
Dr purchase 45000
Cr cash 45000
Cr sales tax 2000
Expenses
Dr freight charges 700
Cr cash 700
Dr insurance exp. 900
Cr cash 900
Dr Inventory 1000
Cr cash 1000
codyman144
Mar 6, 2009, 09:47 AM
Machinery (Capital)
Purchase price: 45,000
Sales Tax: 2000
Installation: 1000
Total 48,000
Rest are expense…
Now Journalize (Hint your first debt should be to Machinery 48,000)