On June 30, 2005, Impo Company, which prepares monthly financial statements, acquired from Japanese Company for 500,000 yen (¥) a machine with an economic life of five years and no residual value. To pay Japanese Company, Impo borrowed ¥500,000 from Japanese Bank on a 12%, 60-day promissory note. Impo acquired a ¥510,000 draft from U.S. Bank on August 29, 2005, to pay the maturity value of the note to Japanese Bank. Relevant spot rates for the yen were as follows:
Instructions
Prepare journal entries (omit explanations) for Impo Company on June 30, July 31, and August 29, 2005, including interest accrual and depreciation of the machine. Use 30-day months for July and August interest.
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