Reference no: EM132558255

Question - On January 2, 2015, Summers Company bought a machine for use in operations. The machine has an estimated useful life of ten years and an estimated residual value of $2,800. The company provided the following expenditures:

a. Invoice price of the machine, $96,000.

b. Freight paid by the vendor per sales agreement, $2,000.

c. Installation costs, $3,400 paid in cash.

d. Payment was made as follows:

On January 2:

The installation costs were paid in cash.

Summers Company common stock, par $1; 5,000 shares (market value, $2.50 per share)

Note payable, $47,000; 13.5 percent due April 16, 2015 (principal plus interest)

Balance of invoice price to be paid in cash. The invoice allows for a 8 percent discount for cash paid by January 12.

On January 15:

Summers Company paid the balance due.

Required - Record the purchase on January 2 and the subsequent payment on January 15.