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Cullumber Engineering Corporation purchased conveyor equipment with a list price of $52,200. Three independent cases that are related to the equipment follow. Assume that the
Cullumber Engineering Corporation purchased conveyor equipment with a list price of $52,200. Three independent cases that are related to the equipment follow. Assume that the equipment purchases are recorded gross. 1. Cullumber paid cash for the equipment 25 days after the purchase, along with 5% GST (recoverable) and provincial sales tax of $3,654, both based on the purchase price. The vendor's credit terms were 2/10,n/30. 2. Cullumber traded in equipment with a book value of $2,100 (initial cost $40,200 ) and paid $40,800 in cash one month after the purchase. The old equipment could have been sold for $9,900 at the date of trade but was accepted for a trade-in allowance of $11,400 on the new equipment. 3. Cullumber gave the vendor a $9,800 cash down payment and a 10% note payable with blended principal and interest payments of $21,200 each, due at the end of each of the next two years. Prepare the general journal entries to record the acquisition and the subsequent payment, including any notes payable, in each of the three independent cases above. For item 3, use a table, financial calculator, or Excel. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. List all debit entries before credit entries. Round factor values to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275.) 1. Equipment 52,200 Purchase Discounts Accounts Payable (Purchase of equipment on account) Accounts Payable GST Receivable 2610 Interest Expense 3654 Cash (Payment on account) 2. (To record exchange of equipment) (Payment on account) 3. (Purchase of equipment for cash and a note payable) First Payment on the Note (To record instalment payment on note.) Second Payment on the Note (To record instalment payment on note.)
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