On January 2, Summers Company received a machine that the company had ordered with an invoice price of $85,000. Freight costs of $1000 were paid by the vendor per the sales agreement. The company exchanged the following on January 2 to acquire the machine: a Issued 2,000 shares of Summers Company common stock, par value $1 (market value, $3.50 per share). b. Signed a note payable for $60,000 with an 1.5 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 $2,400 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, 3. Indicate the effects of the purchase and subsequent cash payment on the accounting equation. (Enter decreases to account categories as negative amounts.)

On January 2, Summers Company received a machine that the company had ordered with an invoice price of $85,000. Freight costs of $1000 were paid by the vendor per the sales agreement. The company exchanged the following on January 2 to acquire the machine: a Issued 2,000 shares of Summers Company common stock, par value $1 (market value, $3.50 per share). b. Signed a note payable for $60,000 with an 1.5 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 $2,400 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, 3. Indicate the effects of the purchase and subsequent cash payment on the accounting equation. (Enter decreases to account categories as negative amounts.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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