Argonath Automotive, Inc., entered into the following transactions during the month of June:
a. Purchased a total of eight new cars and trucks from Freddy’s Motors, Inc., for a total of $122,400, one-third of which was paid in cash. The balance is due within 45 days. The total cost of the vehicles to Freddy’s Motors was $104,000.
b. Purchased $7,100 of supplies on account from Green Supply Company. The cost of the supplies to Green Supply Company was $5,900.
c. Paid $630 to Moorhead Power for the monthly utility bill.
d. Sold a truck to Bill’s Transport, Inc. A $3,400 down payment was received with the balance of $17,600 due within 30 days. The cost of the delivery truck to Argonath Automotive was $16,300.
e. Paid $3,750 to Jimmy’s Mechanics for repair work on cars for the current month.
f. Sold one of the new cars purchased from Freddy’s Motors to the town mayor, Sarah Lewis. The sales price was $18,200 and was paid by Lewis upon delivery of the car. The cost of the particular car sold to Lewis was $13,500.
g. Borrowed $40,000 from a local bank to be repaid in one year with 10% interest.
Required:
1. For each of the transactions, make the proper journal entry on the books of Argonath Automotive. (Omit explanations.)
2. For each of the transactions, make the proper journal entry on the books of the other party to the transaction, for example,
(a) Freddy’s Motors, Inc.,
(b) Green Supply Company. (Omit explanations.)
3. Interpretive Question: Why do some of the journal entries for Argonath Automotive and other companies involved appear to be “mirror images” of each other?