(Acquisition Costs of Trucks) Kelly Clarkson Corporation operates a retail computer store. To improve delivery services to customers, the company purchases four new trucks on April 1, 2014. The terms of acquisition for each truck are described below.

1. Truck #1 has a list price of

$15,000

and is acquired for a cash payment of

$13,900

2. Truck #2 has a list price of

$16,000

and is acquired for a down payment of

$2,000

cash and a zero-interest bearing note with a face amount of

$14,000

The note is due

April 1, 2015, Clarkson would normally have to pay interest at a rate of

10%

for such a

borrowing, and the dealership has an incremental borrowing rate of

8%

3. Truck #3 has a list price of

$16,000

It is acquired in exchange for a computer system that

Clarkson carries in inventory. The computer system costs

$12,000

and normally sold by

Clarkson for

$15,200

Clarkson uses perpetual inventory system.

4. Truck #4 has a list price of

$14,000

It is acquired in exchange for

1,000

shares of common stock in Clarkson Corporation. The stock has a par value per share of

$10

and a market value of

$13

per share.

Instructions:

Prepare the appropriate journal entries for the foregoing transactions for Clarkson Corporation.

1

Account Title

Amount

Account Title

Amount

2

Account Title

Amount

Account Title

Amount

Account Title

Amount

Account Title

Amount

Hint: Use the Excel Present Value formula. Cells are formatted to show to 2 decimal places.

3

Account Title

Amount

Account Title

Amount

Account Title

Amount

Account Title

Amount

4

Account title

Amount

Account title

Amount

Account title

Amount