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Oaktree Company purchased new equipment and made the following expenditures: Purchase Price $45,000 Sales Tax $2,200 Freigh Charges for shipment of machine $700 Insurance on machine for 1st yr $900 Installation of machine $1,000 The Equipment, including sales tax, was purchase on open account, with payment due in 30 days
Oaktree Company purchased new equipment and made the following expenditures:
| Purchase Price | $45,000 | |
| Sales Tax | $2,200 | |
| Freigh Charges for shipment of machine | $700 | |
| Insurance on machine for 1st yr | $900 | |
| Installation of machine | $1,000 |
The Equipment, including sales tax, was purchase on open account, with payment due in 30 days. The other expenditures listed above were paid in cash.
REQUIRED:
Prepare the necessary journal entries to record the aboce expenditures.
Expert Solution
EventGeneral JournalDebitCredit1.Equipment($45,000 + 2,200 + 700 + 1,000)$48,900Accounts payable$47,200Cash$1,7002.Prepaid insurance$900Cash$900
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