On January 1, 2013, WT Purchased a New Machine to Be

question 26

Essay

On January 1, 2013, WT purchased a new machine to be used in the business. It paid $10,000 cash down payment and signed an interest-bearing note payable that required it to make three equal annual payments of $5,000 each (including principal and interest). The first payment will be made on December 31, 2013. Assume an 11 percent per annum interest rate, and use the net approach.
(a) Give the entry on January 1, 2013, to record the acquisition:
(b) Give the entry on December 31, 2013, to record the first payment on the note payable:

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Definitions:

Other Accounts Column

The Other Accounts Column appears in accounting journals or ledgers, used to record transactions that do not fit into the standard categories or columns provided, ensuring flexibility in bookkeeping.

Owner's Drawings

Money or other assets that the owner withdraws from the business for personal use.

Cash Receipts Journal

A financial journal that records all cash inflows or money received by the business.

Other Accounts Column

A section in accounting ledger books or financial statements designed to capture data that does not fit into the standard accounts categories.