Required: Prepare journal entries for the following: a. November 1, 2020 Purchased machinery for $93,600 with a $7,200 residual value and a six-year life by paying $14,400 cash and the balance by signing a 8-month note with an annual interest rate of 10% to be paid at the note maturity. b. December 31, 2020 Prepare necessary adjusting entries for the year ended December 31, 2020 to record depreciation of the machinery purchased under (a) using the straight-line method to the nearest month and accrue interests on the note signed under (a). c. July 1, 2021 Sold the machinery purchased under (a) for $81,600 cash and paid off the principal and interests of the note signed under (a).
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November 1, 2020: Machinery (Asset) 93,600 Cash (Asset) 14,400 Notes Payable (Liability) 79,200 To record the purchase of machinery with cash and a note payable. December 31, 2020: Depreciation Expense (Expense) X Accumulated Show more…
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