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National Company
Total Cost of machine

List Price 180,000
Less: Trade Discount 18,000
162,000
Less: Cash Discount 8,100
153,900
Add: Sales Tax (153900*2%) 3,078
Invoice Cost 156,978
Add: Other Expenses
Transportation charges 2,400
Labour charges 1,122
Testing charges 500
Total Other Expenses 4,022
Total Cost of machine 161,000


National Company
General Journal Entries
Date Particulars Debit Cresit
Jul.01,2006 Machine 156,978
Cash 156,978
Jul.01,2006 Machine 4,022
Cash 4,022
Jul.01,2006 Prepaid Insurance 4,000
Cash 4,000
Jul.01,2006 License fee expense 800
Cash 800

Coputation for Depriciation
By Straight Line Method
Total Cost of Machine 161,000
Less: Salavage Value 21,000
Depreciable Cost of Machine 140,000
Useful Life of Machine 10 Years
Yearly Desreciation ( 140,000/10) 14,000

Depreciation 31.12.2006 7,000
Depsreciation 31.12.2007 14,000


National Company
Adjusting & Closing Entries Depreciation
Date Particulars Debit Cresit
Dec.28,2006 Depreciation Expenses 7,000
Allowance for Depsreciation 7,000
Dec.28,2006 Expenses & Revenue Summary 7,000
Depreciation Expenses 7,000
Dec.29,2007 Depreciation Expenses 14,000
Allowance for Depsreciation 14,000
Dec.29,2007 Expenses & Revenue Summary 14,000
Depreciation Expenses 14,000

General Ledger
Machine Cost
Jul.01,2006 161,000 Dec.28,2006 Adjustment 7,000
154,000
161,000 161,000
Jan.01,2007 Balance 154,000 Dec.29,2007 Adjustment 14,000
140,000
154,000 154,000
Jan.01,2008 Balance 140,000



General Ledger
Allowance for Depreciation
7,000 Dec.28,2006 Adjustment 7,000
7,000 7,000
Jan.01,2007 7,000
21,000 Dec.29,2007 14,000
21,000 21,000
Jan.01,2008 21,000



General Ledger
Depreciation Expense
Dec.28,2006 7,000 Dec.28,2006 7,000
Dec.29,2007 14,000 Dec.29,2009 14,000 __.____._