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OConnor Company ordered a machine on January 1 at a purchase price of $110,000. On the date of delivery, January 2, the comp
Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Indicate the e
1. Indicate the effects (accounts, amounts, and + for increase, - for decrease) of each transaction (on January 1, 2, 3, and
1. Indicate the effects (accounts, amounts, and + for increase, - for decrease) of each transaction (on January 1, 2, 3, and
1. Indicate the effects (accounts, amounts, and + for increase. - for decrease) of each transaction on January 1, 2, 3, and 5
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Answer #1

1)

Date Asset Liabilities equity
jan 01 NA [since order of machine will not effect accounting equation] NA NA
jan 2 + 110000 machine +82000   [long term debt 110000-28000]
-28000 cash
jan3 -1100 cash
+1100    [capitalized to machine]
jan5 -6600   cash
+6600    [capitalized to machine]

2)Acquisition cost =purchase cost+freight +installation

         = 110000+1100+6600

           = $ 117700

3)Depreciation expense =[cost-salvage ]/useful life

            =[117700-11800]/10

              = $10590

4)Accumulated depreciation for two years = 10590*2 = 21180

Book value at year2 = cost -accumulated depreciation

     = 117700-21180

        = $96520

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