Prepare Journal Entries to Record the Following Transactions of a Company

question 49

Essay

Prepare journal entries to record the following transactions of a company during the current year:
Mar 1 Purchased a truck for $40,000 with a 5-year useful life and a $5,000 salvage value. Also paid 6% sales tax, $350 for the annual truck license, $300 to paint the truck with the company's colors and name, and $1,500 for maintenance supplies for the future. All payments were in cash. Mar 10 Purchased a garage from a neighboring business with a 7%, 4-year, $67,000 note. The seller's book value for the garage was $42,750. The estimated remaining useful life of the garage is 10 years.
July 5 Paid $800 cash to replace (uninsured) garage windows broken during a storm.
Aug 25 Purchased used shop equipment for $10,700 cash. Sales tax was $825, freight costs $250,
$3,200 for a special base to house the equipment, and reconditioning costs $900, all of which were paid in cash. The estimated useful life of the equipment is 3 years and salvage value is $500.
Oct 5 Purchased office equipment for $11,500 cash. Paid $1,290 in sales tax, $550 for repairs incurred from damage during installation, and $2,200 for supplies to be used for periodic preventive maintenance. The estimated useful life of the equipment is 8 years and salvage value is $1,200.

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Definitions:

Capitalism

An economic system characterized by private ownership of the means of production and their operation for profit.

Socialism

A political and economic system where the means of production, distribution, and exchange are owned or regulated by the community as a whole.

Total Surplus

An economic measure representing the total benefits to consumers and producers, achieved by the difference between the willingness to pay and the actual price paid, plus the cost savings to producers.

Trade

The exchange of goods, services, or both between two or more parties, either within a country or across international borders.