Purchase Solution

Purchase of asset

Not what you're looking for?

Ask Custom Question

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.

Purchase this Solution
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.

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 ...

Purchase this Solution
Free BrainMass Quizzes
Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.

MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.

Change and Resistance within Organizations

This quiz intended to help students understand change and resistance in organizations

View More Free Quizzes
Related BrainMass Solutions

  • Compare and Contrast Lease Versus Purchase Options

    Sometimes companies must make the decision to lease or purchase an asset. The decision depends on the need of the asset and if it makes more sense to lease the asset or purchase based on a financial analysis.

  • How are bulk purchases, such as when all assets of a company

    equipment together, any combined asset purchase, you will always follow the same basic method regardless of the purchase circumstances.

  • Accounting Transactions


    The purchase of a piece of equipment by paying cash: this increases equipment (an asset) and decreases cash (another asset).

    3. Decrease an asset and decrease owner's equity.

  • Accounting for leases: Pros and cons

    (record purchase of asset and related liability to make payments as if a loan).

  • Capital Budgeting Using Cash Flows

    A capital purchase is with the company for years, for better or worse. A mistake can be costly, and this process is actually one of valuing an asset purchase over the expected life of the asset.

  • Treatment of Hire-Purchase in the Financial Statement

    Accounting:The purchase price under a hire purchase contract is treated as a capital purchase and depreciated over the life of the asset. The interest cost is also treated as an expense. GST and Stamp duty are accounted for at the start.

  • Who would be involved in the purchase if a nonprofit hospita

    deciding to purchase the asset.

  • Entries - purchase of assets and subsequent payments on note

    expense Credit current asset: Cash Purchase of vehicle Debit fixed asset: Vehicle Credit current asset: Cash Credit long term debt: Vehicle note payable Payment on vehicle note Debit long term debt: Vehicle note payable Debit expense:

  • asset's purchase price

    119287 asset's purchase price How does an asset's purchase price and carrying value relate to its market value? Purchase price is the price originally paid for acquiring the asset.

  • Lease versus buy

    Depreciation on the asset - If we purchase the asset, we become the owner of the asset and so the depreciation accrues to us which can be used to reduce the amount of tax that is to be paid, there is a depreciation tax shield available on purchase which

View More Related Solutions