Transaction 8 On March 1, fixtures and equipment were purchased for $6,000 with

Question

Transaction 8 On March 1, fixtures and equipment were purchased for $6,000 with a downpayment of $2,000 and a $4,000 note, payable in one year. Interest of 7% per year was due when the note was repaid. The estimated life of the fixtures and equipment is 10 years with no expected salvage value. [Note: Record the complete entry for the March 1 equipment purchase first, then the March 31 depreciation adjusting entry, and finally the March 31 interest adjusting entry. Also, round all answers to the nearest cent.) Account: Dollar amount: Account: Dollar amount: Account: Dollar amount: Account: Cash Accounts Receivable Inventory Prepaid Rent Fixtures and Equipment Accounts Payable Interest Payable Wages Payable Notes Payable Pald-In Capital Retained Earnings Leave Blank Dollar amount: Account: Dollar amount: Account: Dollar amount: Account: Dollar amount: Account: Dollar amount:

Explanation / Answer

JOURNAL ENTRIES:

DATE ACCOUNT TITLES & EXPLANATIONS DEBIT($) CREDIT($) March 1 Fixtures & Equipment 6,000 Cash 2,000 Notes Payable 4,000 March 31 Depreciation expense (6,000 / 10 /12 ) 50 Fixtures & equipments 50 March 31 Interest on Notes payable (4,000 * 7 % for 1 month) 23 Notes payable 23 *-------------*----------------*---------------------*------------*

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