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3 years ago

Problem 10-3A On January 1, 2017, Evers Company purchased the following two machines for use in its production process.

Business

1 answer:

timofeeve [1]3 years ago

7 0

Answer:

Please see the solution below:

Explanation:

Machine A:

(i) Total Machine A Cost 

Purchase Price = $37,500

Sales Tax = $3,600

Shipping Cost = $100

Insurance during shipping = $50

Installation and Testing Cost = $120

Total Machine A cost = $41,370

(ii) Depreciation

Recorded Cost = $41,370

Less: Salvage Value = $5,950

Useful Life = 5 years

Straight Line Method is used to find depreciation per yer will be:

Depreciation = $7,084

(1) The Journal Entry to record purchase of equipment (Machine A)

January 1, 2017

Dr. Equipment $41,370

Cr. Cash $41,370

(2) The Journal Entry to record annual depreciation (Machine A)

December 3, 2017

Dr. Depreciation $7,084

Cr. Accumulated Depreciation - Equipment $7,084

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