bure. On January 3, \" paid $10 for hegt on the machi e On Jaruay S.OCorrer pa a

Question

bure. On January 3, " paid $10 for hegt on the machi e On Jaruay S.OCorrer pa ash fr nstalation costs relating to the machine amounting to $600. On December 31 (the end of the accounting usel ide of 10 years and an estimated residual value of $1,100 aeorted cepncitn n h matod with an estimated 1. indicate the efects (accourts, amourts, and for increase -for decrease) of each transaction (on Jaruary 1, 2.3, and 5) on the accounting equation. (Enter any decreases to account balances with a minus sign O Answer is complete but not entirely correct. 7,000 100 Other Operating Expenses 600 0 2. Compute the acquisition cost of Answer as complete and correct.

Explanation / Answer

1.

2.

Acquisition cost=$10,000+$100+$600

=$10,700

3. Depreciation expense for first year=(10,700-1100)/10

=$960

Date assets = liabilities + Stockholders Equity Jan 1 0 0 0 Jan 2 Cash -3,000 Notes payable $7,000 0 Machine $10,000 Jan 3 Cash -100 0 0 Machine $100 Jan 5 Cash -600 0 0 Machine $600

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