Solution-Prepare journal entry to record the acquisition of

Prepare journal entry to record the acquisition of machine

Reference no: EM132885356

Problem - Determination of Acquisition Cost - In January 2019, Cordova Company entered into a contract to acquire a new machine for its factory. The machine, which has a cash price of $215,000, was paid for as follows:

Down payment $ 55,000

Note payable in 4 equal annual payments starting in January 2020 $120,000

600 shares of Cordova preferred stock with a mutually agreed value of $100 per share (par value $100) $ 60,000

Fair rate of interest on the non-interest-bearing note 10%

Required -

1. Determine the cost of the machine. What principle guides the determination of the cost of the machine?

2. Prepare the journal entry to record the acquisition of the machine.

3. How would your answer change, if at all, if the $215,000 cash price were not available?

Reference no: EM132885356

Questions Cloud

Mission and vission influenced organizational practice : How might mission and vission influenced organizational practice

Explain importance of variation to health care organization : Observe the steps performed to serve customers in a doctors office. Explain the importance of variation to health care organizations and answer the following qu

At what amount should Edwards record the cost of the land : Edwards sold salvaged materials resulting from the demolition for $2,000. At what amount should Edwards record the cost of the land and the new building

Prepare the journal entry to record the acquisition : Big Cat estimates that the cost of dismantling and removing the oil rig will be $700,000. Prepare the journal entry to record the acquisition of oil platform

Prepare journal entry to record the acquisition of machine : Note payable in 4 equal annual payments starting in January 2020 $120,000. Prepare the journal entry to record the acquisition of the machine

Determine the cost of the machine : On April 1, it purchased a machine for its assembly line at a contract price of $400,000 with terms of 2/10, n/30. Determine the cost of the machine

Affect educational achievement : Cultural capital from the home - affect educational achievement? How do studies about family size and birth order complicate our understanding of the effect

Are locally owned businesses more compassionate : Are locally owned businesses more "compassionate" than large corporations? What is the impact on local economies of large companies

What other factors influencing academics and achievement : What other factors influencing academics and achievement did you incorporate into the development of your assessment checklist?

User Account

All Pages

Prepare journal entry to record the acquisition of machine

Reference no: EM132885356

Reference no: EM132885356

Questions Cloud

Reviews

Write a Review

Accounting Basics Questions & Answers

Corvette the leading car manufacturing company acquired

Prepare the General Journal entry for January purchase

What was the average cost per unit for direct materials

What is the present value of this actual stream

Assume x is normally distributed and construct

What additional needs does the company have

Which cost-allocation criterion is most likely to subsidize

Compute pretax financial income

Josh has decided to incorporate his consulting practice

Prepare a post-closing trial balance for western company

Compare and contrast the three approaches to account

Determine the carrying value of this bond issue

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT