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Problem 1: Prepare journal entries for the following if the company adjusts its accounts annually:
(a) 1 November 20X1. Purchased machinery for $93,600 with a $7,200 residual value and a six year life by paying $14,400 down and the balance with a Note Payable. (Ignore interest)
(b) 31 December 20X1. Record the adjusting entry for depreciation using the straight line method to the nearest month.
(c) 1 July 20X2. (i) The depreciation before the disposal; (ii) Sold the machinery for $81,600 cash; and (iii) Paid off the Note Payable.
Financial Statement Analysis and Preparation
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