Iamlet College recently purchased new computing equipment for its library. The following information refers to the pu nd installation of this equipment. . The list price of the equipment was $285,00o; however, Hamlet College qualified for an "education discount" of $25 paid $50,000 cash for the equipment, and issued a three-month, 9 percent note payable for the remaining balance. ?
Iamlet College recently purchased new computing equipment for its library. The following information refers to the pu nd installation of this equipment. . The list price of the equipment was $285,00o; however, Hamlet College qualified for an "education discount" of $25 paid $50,000 cash for the equipment, and issued a three-month, 9 percent note payable for the remaining balance. ?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Instructions
a. In one sentence, make a general statement summarizing the nature of expenditures that qualify for inclusion in the cost of
plant assets such as computing equipment.
b. For each of the six numbered paragraphs, indicate which items should be included by Hamlet College in the total cost
added to its Computing Equipment account. Also briefly indicate the proper accounting treatment of those items that are
not included in the cost of the equipment.
c. Compute the total cost added to the college's Computing Equipment account.
d. Prepare a journal entry at the end of the current year to record depreciation on the computing equipment. Hamlet College
intends to depreciate this equipment by the straight-line method (half-year convention) over an estimated useful life of five
years. Assume a zero residual value.

Transcribed Image Text:PROBLEM 9.1A Determining the Cost of Plant Assets and Depreciation e L09-1, L LO9-2, LO9-3
Hamlet College recently purchased new computing equipment for its library. The following information refers to the purchase
and installation of this equipment.
1. The list price of the equipment was $285,00o; however, Hamlet College qualified for an "education discount" of $25,000. It
paid $50,000 cash for the equipment, and issued a three-month, 9 percent note payable for the remaining balance. The
note, plus accrued interest charges of $4,500, was paid promptly at the note's maturity date.
2. In addition to the amounts described in 1, Hamlet paid sales taxes of $15,000 at the date of purchase.
3. Freight charges for delivery of the equipment totaled $1,000.
4. Installation costs related to the equipment amounted to $5,000.
5. During installation, one of the computer terminals was accidentally damaged by a library employee. It cost the college $500
to repair this damage.
6. As soon as the computers were installed, the college paid $4,000 to print admissions brochures featuring the library's new,
state-of-the-art computing facilities.
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