Determining cost of asset

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Reference no: EM1350288

Northeast Logging Co. of $120,000. The seller agreed to allow a 5 percent discount because Northeast paid cash. Delivery terms were FOB shipping point. Freight cost amounted to $2,500. Northeast had to hire an individual to operate the saw. Northeast had to build a special platform to mount the saw. The cost of the platform was $1,000. The saw operator was paid an annual salary of $40,000. The cost of the company's theft insurance policy increased by $2,000 per year as a result acquiring of the saw. The saw had a four-year useful life and an expected salvage value of 10,000.

a. Determine the amount to be capatilized in an asset account for the purchase of the saw.
b. record the purchase in general journal format

Reference no: EM1350288

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