A is corrent. To determine machinery purchases, the solutions approach is to set up a T-account for machinery. The T-account can be analyzed to determine that year 2 machinery purchases totaled $110,000. Note that when machinery is sold, the credit to the machinery account is the original cost ($40,000), not the book value ($30,000) or the cash proceeds ($26,000).B is incorrect. To determine machinery purchases, the solutions approach is to set up a T-account for machinery. The T-account can be analyzed to determine that year 2 machinery purchases totaled $110,000. Note that when machinery is sold, the credit to the machinery account is the original cost ($40,000), not the book value ($30,000) or the cash proceeds ($26,000).C is incorrect. To determine machinery purchases, the solutions approach is to set up a T-account for machinery. The T-account can be analyzed to determine that year 2 machinery purchases totaled $110,000. Note that when machinery is sold, the credit to the machinery account is the original cost ($40,000), not the book value ($30,000) or the cash proceeds ($26,000).D is incorrect. To determine machinery purchases, the solutions approach is to set up a T-account for machinery. The T-account can be analyzed to determine that year 2 machinery purchases totaled $110,000. Note that when machinery is sold, the credit to the machinery account is the original cost ($40,000), not the book value ($30,000) or the cash proceeds ($26,000). |
