Question

On March 1, fixtures and equipment were purchased for $5,500 with a downpayment of $1,500 and a $4,000 note, payable in one year. Interest of 7% 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.]

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Answer 1

Date	Accounts and Explanation	Debit	Credit
March 1	Fixtures and equipment	$5,500
	Cash		$1,500
	Notes Payable		$4,000
	(To record the purchase of fixtures and equipment)
March 31	Depreciation expense [($5,500/12 years)*1/12 months]	$38.19
	Accumulated depreciation		$38.19
	(To record the depreciation expense)
March 31	Interest expense ($4,000*7%*1/12)	$23.33
	Interest payable		$23.33
	(To record the accrued interest)