Sandhill Corp. sells idle machinery to Hollis Company on July 1, 2020, for $33,000. Sandhill agrees to repurchase this equipment from Hollis on June 30, 2021, for a price of $34,320 (an imputed interest rate of 4%). DateAccount ParticularsDebit ($) Credit ($)July 1,2020Cash33,000 Liability to Hollis Company(To record repurchase obligation) 33,000Dec 31,2020Interest Expense (33,000*4%*6/12)660 Liability to Hollis Company(To record interest expense) 660 **Journal Entry Instructions for Machinery Repurchase**Prepare the journal entry for Sandhill when the machinery is repurchased on June 30, 2021.*Note: Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.*| Date | Account Titles and Explanation | Debit | Credit ||---------------|--------------------------------|-------|--------|| Jun. 30, 2021 | | | || | | | || | *(To record interest)* | | || | | | || | *(To record payment)* | | |Use this template to accurately document the financial transaction. Ensure all account titles and amounts are recorded properly to reflect interest and payment records.

Journal entry is a primary entry that records the financial transactions initially.

Answered: Sandhill Corp. sells idle machinery to…

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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Sandhill Corp. sells idle machinery to Hollis Company on July 1, 2020, for $33,000. Sandhill agrees to repurchase this equipment from Hollis on June 30, 2021, for a price of $34,320 (an imputed interest rate of 4%).

Date	Account Particulars	Debit ($)	Credit ($)
July 1,2020	Cash	33,000
	Liability to Hollis Company (To record repurchase obligation)		33,000
Dec 31,2020	Interest Expense (33,0004%6/12)	660
	Liability to Hollis Company (To record interest expense)		660

**Journal Entry Instructions for Machinery Repurchase**

Prepare the journal entry for Sandhill when the machinery is repurchased on June 30, 2021.

*Note: Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.*

| Date | Account Titles and Explanation | Debit | Credit |
|---------------|--------------------------------|-------|--------|
| Jun. 30, 2021 | | | |
| | | | |
| | *(To record interest)* | | |
| | | | |
| | *(To record payment)* | | |

Use this template to accurately document the financial transaction. Ensure all account titles and amounts are recorded properly to reflect interest and payment records.

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