Question

** use your own words, don't copy and paste, don't use handwriting, please**

5- LMN Company purchased a new equipment for $200000 less a 1000 discount. Alaissa paid $25,000 for transportation and $6,000 for installation of the Cars. Calculate the acquisition cost and record the transaction:

6- ABC Company purchased land for $80,000. The company also paid $12,000 in accrued taxes on the property. Calculate the land cost and record the transaction:

Answer 1

5.

Cost of new equipment = $200,000

Less: Discount = -$1,000

Add: Transportation costs = $25,000

Add: Installation costs = $6,000

Total cost of new equipment to be capitalised in the books of accounts = $200,000 - $1,000 + $25,000 + $6,000 = $230,000

Journal entry:

Equipment A/c Debit $230,000

Cash / Bank A/c Credit $230,000

6.

Land cost for ABC Company will be total cost paid to purchase land

Land cost = $80,000

Add: Accrued taxes on property = $12,000

Total land cost to be to be capitalised in the books of accounts = $80,000 + $12,000 = $92,000

Journal entry:

Land A/c Debit $92,000

Cash / Bank A/c Credit $92,000