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P$8-1($Algo$)$ Explaining the Nature of a Long$-$Lived Asset and Determining and Recording the Financial

Statement Effects of Its Purchase LO$8-1,8-2$

$[$The following information applies to the questions displayed below.$]$

On January $2,$ Summers Company received a machine that the company had ordered with an invoice price of $$100,000.$

Freight costs of $$790$ were paid by the vendor per the sales agreement. The company exchanged the following on

January $2$ to acquire the machine:

a$.$ Issued $2,200$ shares of Summers Company common stock, par value $$1($market value, $$3\mathrm{.}50$ per share$).$

b$.$ Signed a note payable for $$50,000$ with an $10\mathrm{.}5$ percent interest rate $($principal plus interest are due April $1$ of the

current year$).$

c$.$ The balance of the invoice price was on account with the vendor, to be paid in cash by January $12.$

On January $3,$ Summers Company paid $$2,100$ cash for installation costs to prepare the machine for use.

On January $12,$ Summers Company paid the balance due on its accounts payable to the vendor.

P$8-1$ Part $3$

Indicate the effects of the purchase and subsequent cash payment on the accounting equation.

Note: Enter decreases to account categories as negative amounts.

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