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Rom4ik [11]
4 years ago
5

Delaney company is considering replacing equipment which originally cost $600,000 and which has $420,000 accumulated depreciatio

n to date. a new machine will cost $790,000 and the old equipment can be sold for $8,000. what is the sunk cost in this situation?
Business
1 answer:
Charra [1.4K]4 years ago
7 0
In this case, we have to deduct the original equipment cost with the accumulated depreciation to date.
$600,000 - $420,00 = $180,000

Purchasing a new machine would cost $790,000, which can be deducted with the remaining value of the old machine plus its value once sold. To do this, we have:
$790,000 - $180,000 - $8,000 = $602,000

The sunk cost in this case is $602,000.
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The general  journal entries to record these transactions are: Debit Cash  $125,000, Debit Office equipment $30,000, Credit Common stock   $155,000.

<h3>Journal entries</h3>

Karla tanner journal entries

1-Apr

Debit Cash  $125,000

Debit Office equipment  $30,000

Credit Common stock   $155,000

($125,000+$30,000)

(To record the investment in cash)

2-Apr

Debit Prepaid rent  $7,200

Credit Cash   $7,200

(To record the cash prepaid as rent)

 

3-Apr

Debit Office equipment  $15,000

Debit Office supplies  $3,000

Credit Accounts payable   $18,000

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(To record the purchase of office equipment and office supplies )

6-Apr

Debit Cash  $2,000

Credit Service revenue   $2,000

(To record the receipt of cash)

 

9-Apr

Debit Accounts receivable  $10,000

Credit Service revenue   $10,000

(To record  services revenue)  

13-Apr

Debit Accounts payable $18,000

Credit Cash   $18,000

(To record accounts payable )

 

19-Apr

Debit Prepaid insurance  $6,000

Credit Cash   $6,000

(To record the cash prepaid as insurance)  

22-Apr

Debit Cash  $8,000

Credit Accounts receivable   $8,000

(To record account receivable)

25-Apr

Debit Accounts receivable  $2,640

Credit Service revenue   $2,640

(To record the services revenue)  

28-Apr

Debit Dividend  $6,200

Credit Cash   $6,200

(To record the cash paid as dividend)  

29-Apr

Debit Office supplies  $1,000

Credit Accounts payable   $1,000

(To record the purchase of office supplies)  

30-Apr

Debit Utilities expense  $700

Credit Cash   $700

(To record cash)

Therefore the general  journal entries to record these transactions are: Debit Cash $125,000, Debit Office equipment $30,000, Credit Common stock $155,000.

Learn more about journal entries here:brainly.com/question/20714023

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