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# Ronson recently purchased a new boat to help ship product overseas. The following information is related to that purchase: • purchase price $4,500,000 • cost to bring boat to production facility$15,000 • yearly insurance cost $12,000 • pays annual maintenance cost of$22,000 • received a 10% discount on sales price Determine the acquisition cost of the boat and record the journal entry needed.

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### Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685

#### Solutions

Chapter
Section
FindFindarrow_forward

### Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 11, Problem 9EB
Textbook Problem
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## Ronson recently purchased a new boat to help ship product overseas. The following information is related to that purchase:• purchase price $4,500,000• cost to bring boat to production facility$15,000• yearly insurance cost $12,000• pays annual maintenance cost of$22,000• received a 10% discount on sales priceDetermine the acquisition cost of the boat and record the journal entry needed.

To determine

Introduction:

Journal entries record business transactions. These transactions have double effect on accounts such that total of all assets equate with liabilities and equities.

To calculate:

The acquisition cost of the new boat and to journalize the same.

### Explanation of Solution

Calculation of acquisition cost of new boat by Company R:

 Particulars Amount ($) Purchase Price 4,500,000 Add: Cost to Set-up Boat at Production Facility 15,000 Add: Yearly Insurance Cost 12,000 Add: Annual Maintenance Cost 22,000 Less: Discount Received ($4,500,000×10%) (450,000) Total Acquisition Cost of the Boat</

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