Problem 1 Lane Enterprises Ltd. purchased some new equipment with a list price of $ 75,000....

Problem 1 Lane Enterprises Ltd. purchased some new equipment with a list price of $ 75,000. The firm received a 5% discount for paying cash. Sales tax on the purchase was $ 4,500. The company also paid delivery charges of $ 820 and labor costs of $ 1,280 for installing the new equipment. Two additional workers were hired to operate the new machinery at an annual salary of $ 21,000 each. What amount should be recorded to the Equipment account for this purchase?

Expert Solution

List price	75000
Less: Discount	-3750	=75000*5%
Sales tax	4500
Delivery charges	820
Labor costs	1280
Equipment cost	77850

ekkarill92 answered 2 years ago

Bay Inc. purchased some new equipment on January 1, 2019, with a list price of $50,000....

Bay Inc. purchased some new equipment on January 1, 2019, with a list price of $50,000. The supplier agreed to accept a deposit of $20,000 on the date of purchase and a promissory note requiring payment of $10,000 on each December 31 for the next three years (December 31, 2019, to December 31, 2021). Bay is pleased that no interest is charged on the note since its bank would have charged 7% interest. The equipment arrived on January 5, 2019,...

Daily Enterprises is contemplating the acquisition of some new equipment. The purchase price is $35,000. The...

Daily Enterprises is contemplating the acquisition of some new equipment. The purchase price is $35,000. The equipment has a 4-year life. The company expects to sell the equipment at the end of year 4 for $7,000. The firm uses MACRS depreciation which allows for 33.33 percent, 44.44 percent, 14.82 percent, and 7.41 percent depreciation over years 1 to 4, respectively. The equipment can be leased for $9,000 a year. The firm can borrow money at 9 percent and has a...

On May 1, 2019, Blanton’s Corp. purchased equipment. The equipment had a list price of $220,000....

On May 1, 2019, Blanton’s Corp. purchased equipment. The equipment had a list price of $220,000. Because it was a favored customer of the dealer, the dealer discounted the price to Blanton’s by $5%. The dealer also offered to finance 90% of the total after-discount price plus the sales tax at the rate of 6.0% for 18 months at a rate of 2.4% per year. No payments are due on the note until it matures. Blanton’s accepted those terms, signed...

Burnaby Ltd. is considering the acquisition of new production equipment. If purchased, the new equipment would...

Burnaby Ltd. is considering the acquisition of new production equipment. If purchased, the new equipment would cost $1,850,000. Installation and testing costs would be $35,000 and $25,000 respectively. Once operational, the equipment will cause an increase in working capital of $120,000. The new equipment is expected to generate increased annual sales of $720,000. Variable costs to operate the machine are estimated at 42% of sales and annual fixed costs would be lowered by $75,000. The equipmenthasanestimate6yearlifeandasalvagevalueof$90,000. Thecompanyrequiresan11% return on its...

Mason Ltd. purchased, for cash, equipment with an invoice price of $90,000.

Mason Ltd. purchased, for cash, equipment with an invoice price of $90,000. Other costs incurred were freight costs, $1,400; insurance while the equipment was in transit, $1,200; material and labour costs in testing equipment, $2,000; oil lubricants and supplies to be used while operating the equipment, $850; annual fire insurance policy covering equipment after it was put in use, $900; import duties $400. The equipment is estimated to have an $8,000 residual value at the end of its 10-year useful...

A firm purchased some equipment at a price of $150,000. The equipment resulted in an annual...

A firm purchased some equipment at a price of $150,000. The equipment resulted in an annual net savings of $6,000 per year during the 10 years it was used. At the end of 10 years, the equipment was sold for $110,000. Draw a cash-flow diagram that depicts the situation. Assuming an annual effective interest rate of 6.5%, what was the equivalent cost to the company of this transaction on the purchase date?

1. On January 1, Year 1, Milton Manufacturing Company purchased equipment with a list price of...

1. On January 1, Year 1, Milton Manufacturing Company purchased equipment with a list price of $27,000. A total of $2000 was paid for installation and testing. During the first year, Milton paid $3000 for insurance on the equipment and another $600 for routine maintenance and repairs. Milton uses the units-of-production method of depreciation. Useful life is estimated at 100,000 units, and estimated salvage value is $4000. During Year 1, the equipment produced 14,000 units. What is the amount of...

Fox Ltd has purchased a truck on 1 July 2018. The list price of the truck...

Fox Ltd has purchased a truck on 1 July 2018. The list price of the truck was $200,000 but Fox Ltd was invoiced and paid only $180,000. Fox Ltd did have to pay for an inspection costing $30,000 on 1 July 2018 before the truck could be used for the first time. In addition, the company purchased an annual insurance policy for the truck costing $24,000 (recorded using the asset approach). The truck will be depreciated using the reducing balance...

1. Cutter Enterprises purchased equipment for $72,000 on January 1, 2018. The equipment is expected to...

1. Cutter Enterprises purchased equipment for $72,000 on January 1, 2018. The equipment is expected to have a five-year life and a residual value of $6,000. Using the sum-of-the-years'-digits method, depreciation for 2019 and book value at December 31, 2019, would be: Multiple Choice $19,200 and $30,800 respectively. $19,200 and $28,800 respectively. $17,600 and $26,400 respectively. $17,600 and $32,400 respectively. 2. Cutter Enterprises purchased equipment for $66,000 on January 1, 2018. The equipment is expected to have a five-year life...

Diamond Autobody purchased some new equipment. The new equipment cost $90,000. The company estimates the equipment...

Diamond Autobody purchased some new equipment. The new equipment cost $90,000. The company estimates the equipment will have a residual value of $10,000. Diamond also estimates it will use the equipment for eight years or about 5,000 total hours. Required: Prepare a depreciation schedule for eight years using the following methods: 1. Straight-line. 2. Double-declining-balance. 3. Activity-based. Actual use per year was as follows: Year Hours Used 1 850 2 750 3 800 4 730 5 700 6 625 7...

Question