Business

Omari Sims

12 February, 01:29

O'Connor Company ordered a machine on January 1 at a purchase price of $100,000.

On the date of delivery, January 2, the company paid $25,000 on the machine and signed a long-term note payable for the balance.

On January 3, it paid $1,000 for freight on the machine.

On January 5, O'Connor paid cash for installation costs relating to the machine amounting to $6,000.

On December 31 (the end of the accounting period), O'Connor recorded depreciation on the machine using the straight-line method with an estimated useful life of 10 years and an estimated residual value of $10,700.

Required:

1. Indicate the effects (accounts, amounts, and for increase or decrease) of each transaction (on January 1, 2, 3, and 5) on the accounting equation. (Enter any decreases to account balances with a minus sign.)