Business has been good for Get Your Motor Runnin\' and the company needs more sp

Question

Business has been good for Get Your Motor Runnin' and the company needs more space and equipment. using the journal provided below, record the following fixed asset purchases:

1-Aug   Purchased a new building for the business at a cost of $750,000. Obtained a mortgage from First Bank of Somewhere to finance the purchase. The purchase includes a building, lot, and parking lot. The appraisal of the property provided the following values:

                 Land                     $50,000

                 Building                 $730,000

                  Parking Lot            $20,000

5-Aug     Purchased new equipment costing $15,000 by signing a one-year, 10% note.

5-Aug      Obtained a loan from the bank to purchase a truck and trailer to use to provide onsight repair and towing services, $35,000.

Part 2: Explain how these transactions meet the historical cost principle.

Journal Date Account Title Debit Credit

Explanation / Answer

Business has been good for Get Your Motor Runnin' and the company needs more sp

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