Mother Hips Garment Company Purchased Equipment on June 1 for $90,000

question 88

Essay

Mother Hips Garment Company purchased equipment on June 1 for $90,000, paying $20,000 cash and signing a 9%, 2-month note for the remaining balance. The equipment is depreciated at the rate of $18,000 per year. Mother Hips Garment Company prepares monthly financial statements.
Instructions
(a) Prepare the general journal entry to record the acquisition of the equipment on June 1st.
(b) Prepare the adjusting journal entry for depreciation that should (c) Show how the equipment will be reflected on Mother Hips Garment Company's balance sheet on June 30th.

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Definitions:

Business Segment

A distinct part of a company that focuses on a specific product or market sector, often with its own performance measurement.

Debt to Equity Ratio

A measure of a company's financial leverage calculated by dividing its total liabilities by stockholders' equity, indicating the proportion of equity and debt used to finance the company's assets.

Comparative Financial Statement

Financial statements that provide a comparison of a company's financial performance over multiple periods.

Common-Size Financial Statement

A financial analysis tool that expresses each line item as a percentage of a common base figure.