Question

Laurel Cleaners purchased an automatic dry cleaning machine for $145,000 from TGF Corporation on April 1, 2011. Laurel paid $45,000 in cash and signed a five-year, 10 percent note for $100,000. Laurel will pay interest on the note each year on March 31, beginning in 2012. Transportation charges of $3,815 for the machine were paid by Laurel. Laurel also paid $2,400 for the living expenses of the TGF installation crew. Solvent, necessary to operate the machine, was acquired for $1,000. Of this amount, $600 of the solvent was used to test and adjust the machine.

Required:
1. Compute the cost of the new dry cleaning machine.
2. Conceptual Connection: Explain why you excluded any expenditures from the cost of the dry cleaning machine.


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  • CreatedSeptember 22, 2015
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