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TTG Landscaping purchased a dump truck for $150,000. In addition, they spent $12,000 in sales tax, $200 to paint the company’s logo on the truck, $900 for a vehicle license, and $2,400 for accident insurance. What is the journal entry they should enter for this transaction?

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Shakiru

Answer:TTG Landscaping Journal $

1.Dump truck Dr 150,000

Sales tax Dr 12,000

Logo. Dr. 200

Vehicle License Dr 900

Accident insurance Dr 2400

Cash. CR. 165,500

Narration. Being cost incurred on Dump truck and additional expenses incurred to make it usable.

2.

Dump truck Dr1 5500

Sales tax Cr 12,000

Logo. Cr. 200 Vehicle License Cr. 900

Accident insurance. CR 2400

Narration. Transfer of additional cost incurred on Dump truck purchase to Dump truck Accounts

The cost of an asset includes the purchase price, tax theron and other cost incurred to make it usable.

abiolataiwo2015

Based on the information given the appropriate journal entry they should enter for this transaction is:

Debit Equipment $162,200

Debit License Expense $900

Debit Prepaid Insurance $2,400

Credit Cash $165,500

TTG Landscaping Journal entry

Debit Equipment $162,200

($150,000+$12,000+$200)

Debit License Expense $900

Debit Prepaid Insurance $2,400

Credit Cash $165,500

($162,200+$900+$2,400)

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