On March 1, fixtures and equipment were purchased for $5,000 with a downpayment

Question

On March 1, fixtures and equipment were purchased for $5,000 with a downpayment of $1,500 plus a $3,500 note payable in one year. Interest of 7% per year is due when the note is repaid. The estimated life of the fixtures and equipment is 8 years with no expected salvage value. Depreciation on the fixtures and equipment is computed on a straight-line basis. [Note: Record the March 1 equipment purchase first, then the March 31 depreciation adjusting entry, and finally the March 31 interest adjusting entry. Also, round all answers to the nearest cent.]

Options for Account portion:

Cash

Accounts Recievable

Inventory

Prepaid Rent

Fixtures and Equipment

Accounts Payable

Interest Payable

Wages Payable

Notes Payable

Paid-In Capital

Retained Earnings

Leave Blank

Account: Dollar Amount:

Account: Dollar Amount:

Account: Dollar Amount:

Account: Dollar Amount:

Account: Dollar Amount:

Explanation / Answer

Date Account Debit credit 1 Fixtures and equipment 5000 cash 1500 Note payable    3500 2 Depreciation /Retained earning    520.83 Fixture and equipment 520.83 [depreciation charged   5000/8 = 625 * 10/12 = 520.83 3 Retained earning 204.17 Interest payable      [3500*.07 * 10/12] 204.17

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