Ask Question
12 January, 13:11

Oaktree Company purchased new equipment and made the following expenditures:

Purchase price $ 59,000

Sales tax 3,600

Freight charges for shipment of equipment 840

Insurance on the equipment for the first year 1,040

Installation of equipment 2,400

The equipment, including sales tax, was purchased on open account, with payment due in 30 days. The other expenditures listed above were paid in cash.

Required:

Prepare the necessary journal entries to record the above expenditures

+3
Answers (1)
  1. 12 January, 15:06
    0
    Cr. Dr.

    Equipment $66,880

    Account Payable $62,600

    Cash $4,280

    Explanation:

    All the costs incurred to make asset usable should be capitalised.

    Equipment Cost = Purchase Price + Sales Tax + Freight Charges + Insurance Charges + Installation

    Equipment Cost = $59,000 + $3,600 + $840 + $1,040 + $2,400

    Equipment Cost = $66,880
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Oaktree Company purchased new equipment and made the following expenditures: Purchase price $ 59,000 Sales tax 3,600 Freight charges for ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers