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On January 1, 2019, Geonosis Corporation purchased a new kyber crystal machine. To finance the purchase,...

On January 1, 2019, Geonosis Corporation purchased a new kyber crystal machine. To finance the purchase, the company borrowed $12,000 and signed a 3-year installment note requiring 4% annual interest. As a result, payments of $4,324.18 must be made at the end of the year for the next three years. The company believes the machine will have a 10-year useful life and a $1,000 residual value. Required: Use the templates provided and labaled in Red/Yellow for each number below.

1. Journalize the acquisition of the kyber crystal machine on January 1, 2019.

2. Complete the amortization table for the installment note.

3. Journalize the payment for December 31, 2019

4. Calculate and journalize the amount of depreciation expense to be recorded at December 31, 2019, if the company utilized the straight-line method of depreciation on an annual basis.

Solutions

Expert Solution

Journal entries
S.no. Accounts title and explanations Debit $ Credit $
a. Mahinery equipment 12000
    Notes payable 12000
(for machine purchased)
Amort Chart:
Date Payment Int. Principle Outstanding
paid balance
01.01.19 12000
31.12.19 4324.18 480 3844.18 8155.82
31.12.20 4324.18 326.23 3997.95 4157.87
31.12.21 4324.18 166.31 4157.87 0
Journal entries
S.no. Accounts title and explanations Debit $ Credit $
31.12.19 Notes payable 3844.18
Interest expense 480
     Cash account 4324.18
(for payment of notes)
31.12.19 Depreciation expense 1100
     Accumulated depreciation (12000-1000)/10 1100
(for depreciation charged)

ekkarill92 answered 1 year ago
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