QQuestionAccounting
QuestionAccounting
Per company policy, tools over $1000 are capitalized. What is the correct entry to record a tool purchase of $500?
5 months agoReport content
Answer
Full Solution Locked
Sign in to view the complete step-by-step solution and unlock all study resources.
Step 1I'll solve this accounting problem step by step:
Step 2: Understand the Capitalization Threshold
The company policy states that tools over $1,000 are capitalized. In this case, the tool purchase is $500, which is below the capitalization threshold.
Final Answer
The correct accounting entry for a $500 tool purchase is: - Debit Supplies Expense: $500 - Credit Cash: $500 This entry expenses the tool immediately because it is below the $1,000 capitalization threshold.
Need Help with Homework?
Stuck on a difficult problem? We've got you covered:
- Post your question or upload an image
- Get instant step-by-step solutions
- Learn from our AI and community of students