The equipment, including sales tax, was purchased on open account, with payment

Question

     The equipment, including sales tax, was purchased on open account, with payment due in 30 days. The other expenditures listed above were paid in cash.

Prepare the necessary journal entries to record the above expenditures. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

1.Record the purchase of equipment.

2.Record any expenditures not capitalized in the purchase of equipment.

Explanation / Answer

Debit Credit

1) Machinery a/c $ 70,680.00

(63,000 + 4,000+880+2800)

To cash a/c $ 3,680.00

ToAccounts payable a/c $ 67,000.00

(For the purchase of machinery by payment due in 30 days )

2 ) pre paid Insurance a/c $ 1080.00

  To cash a/c $ 1080.00

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