Transaction 8 On March 1, fixtures and equipment were purchased for $4,500 with

Question

Transaction 8 On March 1, fixtures and equipment were purchased for $4,500 with a downpayment of $2,000 and a $2,500 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 12 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.] Account: Account: Account: Account: Account: Account: Account: Account: Dollar amount: Dollar amount: Dollar amount: Dollar amount: Dollar amount: Dollar amount: Dollar amount:

Explanation / Answer

Solution:

Account: Cash Dollar amount: -$2,000

Account Fixtures and equipment Dollar amount: $4,500

Account Notes payable Dollar amount: $2,500

Account Fixtures and equpment Dollar amount: -$31

Account Retained earnings Dollar amount: -$31 ($4,500/12 x 1/12)

Account Interest payable Dollar amount $9

Account Retained earnings Dollar amount -$9 ($2,500 x 0.045 x 1/12)

Account - Dollar amount -

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