Question

On March 1, fixtures and equipment were purchased for $4,500 with a downpayment of $1,500 and a $3,000 note, payable in one year. Interest of 5.5% 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.]

Answer 1

		Journal Entries in the books of XXX for the year 20XX
	Date	Description	L. F.	Debit ($)	Credit ($)
	01/03/20XX	Fixture And Equipment A/c                 Dr.		4,500.00
		To Cash/Bank A/c			1,500.00
		To Notes Payable A/c			3,000.00
		(Fixture & Equipment purchased)
	31/03/20XX	Depriciation A/c                                       Dr.		46.88
		To Fixture And Equipment A/c			46.88
		(Deprication Charged on Fixture & Equipment for 1 month)
		Working = ($4,500/(8 yrs X 12 months)) X 1 month
	31/03/20XX	Interest on Notes Payable A/c          Dr.		13.75
		To Accrued Interest A/c			13.75
		(Accrued Interest booked for 1 month for Notes Payable at 5.50% P.A.)
		Working = ($3,000 X 5.50/(12 Months X 100))