Northland Shows Ltd. acquired a new amusement ride on July 1. The following details apply to the purchase:
|
Cost per supplier’s invoice |
$20,000 |
|
| (The invoice provided a 1% cash discount if paid within 30 days. It was paid on July 15.) | ||
|
Cash payment on July 4 to Dalton Construction Ltd. For cement base for new ride |
4,000 |
|
|
Transportation paid on purchase, July 5 |
520 |
|
|
Insurance for operation of ride paid in cash on July 5 for three-year term, commencing July 6 |
90 |
|
|
Alterations to new ride paid in cash July 5 (25% of this will be reimbursed by the vendor) |
900 |
|
|
Installation costs paid in cash July 6 |
188 |
|
Required:
- Prepare journal entries to record the acquisition of Northland’s new ride.
- Calculate the carrying amount of the asset.
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