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    Purchase of asset

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    On July 1, 2008, Red Gate Farm buys a combine for $100,000 in cash. Assume that the combine is expected to have seven year life and an estimated salvage value of $16,000 at the end of that time.

    Required

    1. Prepare the journal entry to record the purchase of the combine on July 1, 2008.

    2. Compute the depreciable cost of the combine.

    3. Using the straight-line method, compute the monthly depreciation.

    4. Prepare the adjusting entry to record depreciation at the end of July 2008.

    5. Compute the combine's carrying value that will be shown on Red Gate's balance sheet prepared on December 31, 2008.

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    Solution Preview

    Hi,

    Please see attached file.
    Hope this helps you.

    Thank you

    On July 1, 2008, Red Gate Farm buys a combine for $100,000 in cash. Assume that the combine is expected to have seven year life and an estimated salvage value of $16,000 at the end of that time.

    Required

    1. Prepare the journal entry to record the purchase of the ...

    Solution Summary

    Word file shows computation of depreciation ,carrying value of asset at the end of year , journal entries for purchase of asset and adjusting entry to record depreciation.

    $2.19

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