Determination of Acquisition Cost
Response to the following problem:
On August 2, 2010, Darmow Corporation purchased a new machine on a deferred payment basis. It made a down payment of $1,000 and will make four monthly installments of $2,500 each beginning on September 1, 2010. The cash equivalent price of the machine was $9,500. Darmow incurred and paid installation costs amounting to $300.
Required
Prepare the journal entry to record the acquisition of the machine.