Question

On March 1, fixtures and equipment were purchased for $4,000 with a downpayment of $1,500 and a $2,500 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 11 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:     Cash Accounts Receivable Inventory Prepaid Rent Fixtures and Equipment Accounts Payable Interest Payable Wages Payable Notes Payable Paid-in Capital Retained Earnings Leave Blank           Dollar amount:   

Answer 1

Solution:

Date	Account Name	Debit	Credit
Mar. 1	Fixtures and equipment	$ 4,000.00
	Cash		$ 1,500.00
	Notes Payable		$ 2,500.00
	( To record fixtures and equipment purchase)
Mar. 31	Depreciation Expense [4000/11*1/12]	$        30.30
	Accumulated Depreciation		$        30.30
	( To record depreciation expense)
Mar. 31	Interest Expense [2500*7%*1/12]	$        14.58
	Interest Payable		$        14.58
	( To record interest expense payable)