Answer Happy

Exercise 8-4A Determining the cost of an asset LO 8-1 Southwest Milling Co. purchased a front-end loader to move stacks of lumber. The loader had a list price of $122,250. The seller agreed to allow a 6.25 percent discount because Southwest Milling paid cash. Delivery terms were FOB shipping point. Freight cost amounted to $2,140. Southwest Milling had to hire a specialist to calibrate the loader. The specialist's fee was $850. The loader operator is paid an annual salary of $40,010. The cost of the company's theft insurance policy increased by $2,080 per year as a result of acquiring the loader. The loader had a four-year useful life and an expected salvage value of $13,600. Required a. Determine the amount to be capitalized in an asset account for the purchase of the loader. (Round your answers to the nearest whole dollar. Amounts to be deducted should be indicated with minus sign.) Costs that are to be capitalized: List price Total b. Record the purchase in general journal format. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest whole dollar.) View transaction list Journal entry worksheet < A B с > Record purchase equipment for cash. Note: Enter debits before credits. General Journal Debit Credit Event 1 Record entry View general journal Clear entry

Journal entry worksheet < A В BC с > Record cash paid for freight cost. Note: Enter debits before credits. Event General Journal 2 Debit Credit Record entry View general journal Clear entry

Journal entry worksheet < A B A B с Record cash paid for specialist's fee. Note: Enter debits before credits. General Journal Debit Credit Event 3 Record entry View general journal Clear entry