Question

On March 1, fixtures and equipment were purchased for $6,000 with a downpayment of $1,000 and a $5,000 note, payable in one year. Interest of 5.5% per year was due when the note was repaid. The estimated life of the fixtures and equipment is 12 years with no expected salvage value. [Note: Record the complete entry for the March 1 equipment purchase first, the March 31 depreciation adjusting entry second, and the March 31 interest adjusting entry third. Also, round all answers to the nearest cent.]

Account:    Dollar amount:   

Account:    Dollar amount:   

Account:    Dollar amount:   

Account: Dollar amount:   

Account: Dollar amount:   

Account:    Dollar amount:   

Account: Dollar amount:   

Account: Dollar amount:   

Answer 1

Journal Entries:

Date	Account Titles & Explanation	Debit	Credit
Mar 01	Fixture and Equipment	$6000
	Cash		$1000
	Note Payable		$5000
	(Record of equipment Purchased)
Mar 31	Depreciation Expense	$41.67
	Accumulated Depreciation		$41.67
	(Depreciation Expense for march)
Mar 31	Interest Expense	$22.92
	Interest Payable		$22.92
	(Adjusting entries for Interest on Note)

Explanation:

Depreciation Expense = ($6000 - $0) / 12 = $500

Depreciation Expense for March = $500 x 1/12 = $41.67

Interest on Note payable = ($5000 x 5.5%) x 1/12 = $22.92