I need your help to answer these question parts, please! ( Type the answers up p
ID: 2410039 • Letter: I
Question
I need your help to answer these question parts, please! ( Type the answers up please, so it becomes more clear for me) o'Connor Company ordered a machine on January 1 at a purchase price of $120,000. On the date of delivery, January 2, the company paid $30,000 on the machine and signed a long-term note payable for the balance. On January 3, it paid $1,200 for freight on the machine. On January 5, O'Connor paid cash for installation costs relating to the machine amounting to $7,200 On December 31 (the end of the accounting period), O'Connor recorded depreciation on the machine using the straight-line method with an estimated useful life of 10 years and an estimated residual value of $12,800Explanation / Answer
1.
2. Acquisition cost of the machine = Purchase price of machine + Freight paid on machine + Installation cost
= 120,000 + 1,200 + 7,200
= $128,400
3. Annual depreciation = (Aquisition cost - Scrap value)/ Useful Life of asset
= (128,400 - 12,800)/10
= $11,560
4. Book value of machine at the end of year 2 = 128,400 - 11,560 - 11,560
= $105,280
Date Assets = Liabilities + Stockholders' equity Jan 1 Jan 2 Cash -30,000 Long term note payable 90,000 Machine 120,000 Jan 3 Machine 1,200 Cash -1,200 Jan 5 Machine 7,200 Cash -7,200