connect inal Exam 6 Hamlet College recently purchased new computing equipment fo

Question

connect inal Exam 6 Hamlet College recently purchased new computing equipment for its ibrary, The followng information refers to the purchase and installation of this equipment 1. The list price of the equipment was $285,000; however, Hamlet College qualified for an "education discount" of $25,000. It paid accrued interest charges of $4,500, was paid promptiy at the note's maturity date 2. In addition to the amounts described in 1, Hamlet paid sales taxes of $15,000 at the date of purchase 3. Freight charges for delivery of the equipment totaled $1,000 4. Installation costs related to the equipment amounted to $5.000 5. During installation, one of the computer terminals was accidentally damaged by a library employee It cost the college $500 to repair this damage 6. As soon as the computers were instalied the college paid $4,000 to print admissions brochures featuring the ilbrary's new state-of the-art computing facities Required: c. Compute the total cost added to the college's computing equipment account. d. Prepare a journal entry at the end of the current year to record depreciation on the computing equipment Hamlet College interids to depreciate this equipment by the straight-line method half-year convention) over an estimated useful life of five years. Assume a zero residual value Complete this question by entering your answers in the tabs betow. RequiredCRequired D Compute the total cost added to the college's computing equipiment account Required D >

Explanation / Answer

Part-C Calculation of Total Cost of Computing Equipment: Purchase Price (285,000 – 25,000) 260,000 Sales Tax 15,000 Freight Charges 1,000 Installation Charges 5,000 Total Cost of Computing Equipment $281,000 Part-D Depreciation = (Cost - Residual Value)/Life of the Asset*1/2 (because of half year convention) Depreciation = (281,000 - 0)/5*1/2 = $28,100 Journal Entry: Date Account Titles and Explanation Debit Credit 31st Dec. Depreciation Expense $28,100 Accumulated Depreciation $28,100

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