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Journal entry to record the transactions

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Reference no: EM132615364

Question - On 1 March 2020 Luca Co. acquired a machine from Tofac Co. under the following terms:

List Price of Machine 82,000 (issued a promissory note)

Import Duty 1,500 paid in cash

Delivery Fees 2,050 paid in cash

Electrical Installation Cost 9,500 paid in cash

Pre-production Testing 4,9000 paid in cash

Paid in cash to purchase of a 5 year maintenance contract with Tofac Co. 6,000 pesos.

In addition to the above information Luca Co. was granted a trade discount of 10% on the initial list price of the asset and a settlement discount of 5% if payment for the machine was received within 1 month of purchase. Luca Co. paid for the plant on 25 March 2020.

Required -

1. How should the above information be accounted for in the financial statements?

2. Journal entry to record the above transactions.

Reference no: EM132615364

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