A group of new machines was purchased on February 17, 2021, under a royalty agreement with the
Question:
A group of new machines was purchased on February 17, 2021, under a royalty agreement with the following terms: The purchaser, Keller Corp., is to pay a royalty of $1 to the machinery supplier for each unit of product that is produced by the machines each year. The machines are expected to produce 200,000 units over their useful lives. The machines' invoice price was $75,000, freight costs were $2,000, unloading charges were $1,500, and royalty payments for 2021 were $13,000. Keller uses the units of production method to depreciate its machinery.
Required #3: Prepare journal entries to record the purchase of the new machines, the related depreciation for 2021, and the royalty payment. Round the per-unit charge to the nearest cent.
Intermediate Accounting Volume 1
ISBN: 978-1119496496
12th Canadian edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy