On July 1 2014 Seto Inc purchased a fire extinguisher #604

On July 1, 2014, Seto, Inc. purchased a fire extinguisher system for $130,000 from MTI
Systems. The fire extinguisher system had an estimated life of 15 years and residual value of
$2,800. Seto paid $4,500 for shipping and insurance, and hired an engineering company to
install and set up the fire extinguisher system for $12,500. MTI asked for $80,000 cash payment
upon purchase, $10,000 is due on July 31, 2014, with a 2% discount if Seto makes the payment
by July 10, and a $40,000 one-year note payable plus 6% interest due on June 30, 2015. Seto
paid the invoice on July 31. Seto uses the straight-line depreciation method.On January 1,
2016, Seto replaced a valve component costing $38,700, and as a result, the useful life of the
fire extinguisher system increased by 3 years.On September 3, 2017, the fire extinguisher
system was destroyed by a factory fire. Seto made a claim to the insurance company.
Subsequently, Seto received $125,000 cash on September 30, 2017.Requirements1. Calculate
the acquisition cost of the fire extinguisher system.2. Prepare all journal entries for 2014, 2015,
2016, and 2017.View Solution:
On July 1 2014 Seto Inc purchased a fire extinguisher

ANSWER
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