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Repairs to building
$105,000
Construction of bases for machinery to be installed later
Driveways and parking lots
Remodeling of office space in building
Special assessment by city on land
135,000
122,000
161,000
18,000
On December 20, the company paid cash for machinery, $260,000,
subject to a 2% cash discount, and freight on machinery of $10,500.
On January 1, 2007, Jamona Corp. signed a five-year non-
cancelable lease for a machine. The terms of the lease called for
Jamona to make annual payments of $8,668 at the beginning of each
year, starting January 1, 2007. The machine has an estimated useful
life of six years and a $5,000 un-guaranteed residual value. The
machine reverts to the lessor at the end of the lease term. Jamona
uses the straight-line method of depreciation for all of its plant
assets. Jamona’s incremental borrowing rate is 10%, and the
lessor’s implicit rate is unknown.
Prepare journal entries with appropriate supporting detailed
schedules for the balance sheet items: investments, inventory, fixed
assets, and capital leases.
Prepare appropriate note disclosures.
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