Northlake Nordic Centre Inc. buys a snowmaking pump: invoice price 38,000, freight 1,200, installation and wiring 2,300, and a test run 500, all paid in cash. (HST is recoverable and a separate maintenance plan is not part of this entry.) Record the purchase.
Northlake Nordic Centre Inc. buys a snowmaking pump: invoice price 38,000, freight 1,200, installation and wiring 2,300, and a test run 500, all paid in cash. (HST is recoverable and a separate maintenance plan is not part of this entry.) Record the purchase.
Answer
Dr Equipment 42000; Cr Cash 42000
Accounts - Equipment - Cash - Repairs Expense - Freight Expense - Prepaid Insurance - Accounts Payable Every outlay needed to get the pump in place and working is cost: 38,000 + 1,200 + 2,300 + 500 = **42,000**, all to **Equipment** (debit), with **Cash** (credit) 42,000. The trap is **Freight Expense** or **Repairs Expense** for the freight, installation or test — those are not period expenses; they make the asset ready. Accounts Payable is wrong because the invoice was paid; Prepaid Insurance is a different asset.
Hermanson Vol 1 ch 10 (cost of plant assets; the lump-sum demonstration); Dauderis & Annand §8.1; Lyryx Intermediate FA Vol 1 §9.3 (concept map E1–E3); verified-facts.md V4 (input tax credit)