Reference no: EM132819662

The following expenditures relating to plant assets were made by Prather Company during the first 2 months of 2020.

1. Paid $5,000 of accrued taxes at time plant site was acquired.
2. Paid $200 insurance to cover possible accident loss on new factory machinery while the machinery was in transit.
3. Paid $850 sales taxes on new delivery truck.
4. Paid $17,500 for parking lots and driveways on new plant site.
5. Paid $250 to have company name and advertising slogan painted on new delivery truck.
6. Paid $8,000 for installation of new factory machinery.
7. Paid $900 for one-year accident insurance policy on new delivery truck.
8. Paid $75 motor vehicle license fee on the new truck.

Problem 1: Explain the application of the historical cost principle in determining the acquisition cost of plant assets.

Problem 2: List the numbers of the foregoing transactions, and opposite each indicate the account title to which each expenditure should be debited.