In January 2019, Cordova Company entered into a contract to acquire a new machine for its factory. The machine, which has a cash price of $250,000, was paid for as follows: Down payment Note payable in 4 equal annual payments starting in January 2020 600 shares of Cordova preferred stock with a mutually agreed value of $100 per share (par value $100) Fair rate of interest on the non-interest-bearing note Required: 1. Determine the cost of the machine. What principle guides the determination of the cost of the machine? 2. Prepare the journal entry to record the acquisition of the machine. 3. Next Level How would your answer change, if at all, if the $250,000 cash price were not available? $50,000 $160,000 $60,000 10%
In January 2019, Cordova Company entered into a contract to acquire a new machine for its factory. The machine, which has a cash price of $250,000, was paid for as follows: Down payment Note payable in 4 equal annual payments starting in January 2020 600 shares of Cordova preferred stock with a mutually agreed value of $100 per share (par value $100) Fair rate of interest on the non-interest-bearing note Required: 1. Determine the cost of the machine. What principle guides the determination of the cost of the machine? 2. Prepare the journal entry to record the acquisition of the machine. 3. Next Level How would your answer change, if at all, if the $250,000 cash price were not available? $50,000 $160,000 $60,000 10%
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![$2
1
3
5
DATE
✓
Jan. 1 Machine
GENERAL JOURNAL
ACCOUNT TITLE
Additional Paid-In Capital on Preferred Stock
Discount on Notes Payable
Notes Payable
Preferred Stock
Cash
POST. REF.
DEBIT
250,000.00
200,000.00
Score: 67/73
CREDIT
50,000.00
160,000.00
60,000.00
50,000.00](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F19106f8a-571d-46e7-9458-ef826321280c%2F1bb5f88e-72ef-4650-9680-013a8631b6f7%2Fyx6tzye_processed.jpeg&w=3840&q=75)
Transcribed Image Text:$2
1
3
5
DATE
✓
Jan. 1 Machine
GENERAL JOURNAL
ACCOUNT TITLE
Additional Paid-In Capital on Preferred Stock
Discount on Notes Payable
Notes Payable
Preferred Stock
Cash
POST. REF.
DEBIT
250,000.00
200,000.00
Score: 67/73
CREDIT
50,000.00
160,000.00
60,000.00
50,000.00
![In January 2019, Cordova Company entered into a contract to acquire a new machine for its factory. The machine, which has a cash price of
$250,000, was paid for as follows:
Down payment
Note payable in 4 equal annual payments starting in January 2020
600 shares of Cordova preferred stock with a mutually agreed value of $100 per share (par value $100)
Fair rate of interest on the non-interest-bearing note
Required:
1. Determine the cost of the machine. What principle guides the determination of the cost of the machine?
2. Prepare the journal entry to record the acquisition of the machine.
3. Next Level How would your answer change, if at all, if the $250,000 cash price were not available?
$50,000
$160,000
$60,000
10%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F19106f8a-571d-46e7-9458-ef826321280c%2F1bb5f88e-72ef-4650-9680-013a8631b6f7%2Fhmgd30c_processed.jpeg&w=3840&q=75)
Transcribed Image Text:In January 2019, Cordova Company entered into a contract to acquire a new machine for its factory. The machine, which has a cash price of
$250,000, was paid for as follows:
Down payment
Note payable in 4 equal annual payments starting in January 2020
600 shares of Cordova preferred stock with a mutually agreed value of $100 per share (par value $100)
Fair rate of interest on the non-interest-bearing note
Required:
1. Determine the cost of the machine. What principle guides the determination of the cost of the machine?
2. Prepare the journal entry to record the acquisition of the machine.
3. Next Level How would your answer change, if at all, if the $250,000 cash price were not available?
$50,000
$160,000
$60,000
10%
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