ns On March 1, fixtures and equipment were purchased for $5,500 with a downpayme

Question

ns On March 1, fixtures and equipment were purchased for $5,500 with a downpayment of $1,000 and a $4,500 note, payable in one year. Interest of 6% 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: Cash Account Account Notes Payable Account Rained Earnings Account xtures and Equipment Accountnterest Payable Account: Retained Earnings Dollar amount: Dollar amount: 5500 Dollar amount: 4500 Dollar amount: 38.19 Dollar amount: 38.19 Dollar amount: 22.50 Dollar amount: Dollar amount: Foll-Leave%20Blank 1000 Fixtures and Equipment 22.50 Account: Leave Blank Submit AnswerIncorrect. Tries 3/8 Previous Tries

Explanation / Answer

Cash paid is 100 and notes payabe is 4500 which lead to purchase of teh quipment worth 5500

Now the depricaition is considered to be a staright line depriciation with 12 years value as salvage value is 0

DEpriciation cost will be 38 . This will be deducted from teh retained earning amount 38

Similarly interest payable is 0.06* 4500/12 = 22.5 . The interest is also paid from the retained earning hence a similar amout is deducted from that . Below is teh table with values

Cash -1000 Notes payable 4500 Equipements 5500 Depriciation 38.2 Retained Earning -38.2 Intrest Payable 22.5 Retained earning -22.5

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