El Tapitio purchased equipment from Old World Deli. Old World Deli was closing its business and sold its restaurant equipment for $80,000. In addition to the purchase price, El Tapitio paid shipping costs of $2,000. Employees of El Tapitio installed the ovens; labor costs were $10,000. An outside contractor performed some of the electrical work for $2,200. El Tapitio incurred costs of $800 in testing the equipment.Required:1. Prepare a schedule showing the amount at which the equipment should be recorded in El Tapitio's equipment account.2. Indicate where any amounts not included in the equipment account should be recorded.
What will be an ideal response?
Requirement 1
The ovens should be recorded in the equipment account at $95,000 as detailed in the following schedule:
| Purchase price | $80,000 |
| Shipping costs | 2,000 |
| Labor costs | 10,000 |
| Electrical work | 2,200 |
| Costs incurred in testing equipment | 800 |
| Total Equipment | $95,000 |
Requirement 2
All amounts were included in the equipment account.
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