Question

Point Company paid $4,000 cash to purchase a new machine. The company also paid $500 cash for an initial training cost that was necessary to teach an employee how to operate the machine. Which of the following represents the journal entry that would be necessary to record all capitalized costs related to the purchase of the machine?

Answer 1

Answer:

Explanation:

The journal entry is shown below:

Machine A/c Dr $4,500

       To Cash A/c $4,500

(Being machinery is purchased for cash)

The total amount of machinery purchased cost is shown below:

= Purchase cost of machine + training cost

= $4,000 + $500

= $4,500

Since the machine is purchased for cash so we debited the machine account and credited the cash account as cash