High School

TT Company had the following transactions in 20X4:

On 1 January 20X4, a new machine was purchased at a list price of $24,500. The company did not take advantage of a 2% cash discount available upon full payment of the invoice within 30 days. Shipping cost paid by the vendor was $180. Installation cost was $540, including $180 that represented 10% of the monthly salary of the factory superintendent (installation period, two days). A wall was moved two metres at a cash cost of $630 to make room for the machine. The machine was considered to have two components; an engine valued at $1,000 (net) and the general machine for the balance of the cost.

On 1 January 20X4, the company purchased an automatic counter to be attached to a machine in use; the cost was $378. The estimated useful life of the counter was 7 years, and the estimated life of the machine was 10 years.

On 1 January 20X4, the company bought plant fixtures with a list price of $2,550, paying $850 cash and giving a one-year, non-interest-bearing note payable for the balance. The current interest rate for this type of note was 15%. Use the net method to record the note payable.

During January 20X4, the first month of operations, the newly purchased machine became inoperative due to a defect in manufacture. The vendor repaired the machine at no cost to GTT; however, the specially trained operator was idle during the two weeks the machine was inoperative. The operator was paid regular wages ($465) during the period, although the only work performed was to observe the repair by the factory representative.

During January 20X5, the company exchanged the electric motor on the machine in part (a) for a heavier motor and gave up the old motor and $680 cash. The market value of the new motor was $1,410. The parts list showed a $1,020 cost for the original motor, and it had been depreciated in 20X4 (estimated life, 10 years).

(PV of $1, PVA of $1, and PVAD of $1.) (Use appropriate factor(s) from the tables provided.)



Required:

Prepare the journal entries to record each of the above transactions as of the date of occurrence. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round time value factor to 5 decimal places and final answer to the nearest whole dollar amount.)

Answer :

Please note that these journal entries are provided as examples based on the information provided. The actual journal entries may vary based on specific accounting practices and policies of TT Company. Journal entries for the transactions in 20X4:

1. Purchase of new machine:
Equipment (machine) 24,500
Accounts Payable 24,500
(To record the purchase of a machine at list price)
2. Payment of shipping cost:
Equipment (machine) 180
Cash 180
(To record the payment of shipping cost)
3. Payment of installation cost:
Equipment (machine) 540
Cash 540
(To record the payment of installation cost)
4. Cost of moving the wall:
Building Improvements 630
Cash 630
(To record the cash cost of moving the wall)
5. Cost allocation for machine components:
Equipment (engine) 1,000
Equipment (machine) Balance of cost
(To allocate the cost between the engine and the general machine)
6. Purchase of automatic counter:
Equipment (counter) 378
Cash 378
(To record the purchase of the automatic counter)
7. Purchase of plant fixtures with a note payable:
Plant Fixtures 2,550
Cash 850
Notes Payable Balance of cost
(To record the purchase of plant fixtures with cash and a note payable)
8. Repair of machine and payment of idle operator:
Repairs and Maintenance Machine cost
Wages Expense 465
Cash 465
(To record the repair of the machine and payment to the idle operator)
9. Exchange of electric motor:
Equipment (motor) 1,020
Accumulated Depreciation Depreciation expense
Cash 680
Equipment (motor) Market value
(To record the exchange of the electric motor)
It is recommended to consult with a professional accountant or refer to the company's accounting guidelines for accurate and specific journal entries.

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