Question

Three former college classmates have decided to pool a variety of work experiences by opening a store near campus to sell wireless equipment to students. The business has been incorporated as University Wireless.

Required: Several transactions occurred in March. Each is described separately in this folder. For each transaction, indicate the accounts that are affected, whether they increase or decrease, and the amount of the increase or decrease.

This is all the info given.

On March 1, fixtures and equipment were purchased for $6,000 with a downpayment of $1,500 and a $4,500 note, payable in one year. Interest of 4.5% per year was due when the note was repaid. The estimated life of the fixtures and equipment is 8 years with no expected salvage value.

[Note: Record the complete entry for the March 1 equipment purchase first, the March 31 depreciation adjusting entry second, and the March 31 interest adjusting entry third. Also, round all answers to the nearest cent.]

(Options for Account portion:Cash, Accounts Recievable, Inventory, Prepaid Rent, Fixtures and Equipment, Accounts Payable, Interest Payable, Wages Payable, Notes Payable, Paid-In Capital, Retained Earnings, Leave Blank)

Answer 1

Transaction 8 Account Account Account Account Account Cash Dollar amount -1500 Fixtures and equipment Dollar amount 5937 6000 - 63) Notes payable Dollar amount 4500 Interest payable Dollar amount Retained earnings Dollar amount -80 (63+17) 6000 Entry is :- Fixtures and equipment Cash Notes payable 1500 4500 63 Retained earnings Fixtures and equipment 63 ( 6000/ 8) * 1/12 17 ( 4500 * 4.5% Retained earnings Interest payable 1/12) 17 Note : Here expenses account are not given like dep. Exp. And interest exp., therefore, entry is directly recorded in Retained earnings account. Similarly acc. Dep. Account was not given in options therefore, Fixtures and equipment heve been credited for $63.