Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Exercise 10-11 Pronghorn Engineering Corporation purchased conveyor equipment with a list price of $10,200. Presented below are three independent cases related to the equipment (a)

image text in transcribedimage text in transcribed

Exercise 10-11 Pronghorn Engineering Corporation purchased conveyor equipment with a list price of $10,200. Presented below are three independent cases related to the equipment (a) Pronghorn paid cash for the equipment 8 days after the purchase. The vendor's credit terms are 2/10, n/30. Assume that equipment purchases are initially recorded gross (b) Pronghorn traded in equipment with a book value of $1,800 (initial cost $8,700), and paid $9,900 in cash one month after the purchase. The old equipment could have been sold for $400 at the date of trade. (The exchange has commercial substance.) (c) Pronghorn gave the vendor a $9,700 zero-interest-bearing note for the equipment on the date of purchase. The note was due in one year and was paid on time. Assume that the effective-interest rate in the market was 8%. Prepare the general journal entries required to record the acquisition and payment in each of the independent cases above. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts) No. Account Titles and Explanation Debit Credit (a) Equipment Accounts Payable (To record the purchase of equipment on account.) Accounts Payable Equipment Cash To record the payment on account.) Exercise 10-11 Pronghorn Engineering Corporation purchased conveyor equipment with a list price of $10,200. Presented below are three independent cases related to the equipment (a) Pronghorn paid cash for the equipment 8 days after the purchase. The vendor's credit terms are 2/10, n/30. Assume that equipment purchases are initially recorded gross (b) Pronghorn traded in equipment with a book value of $1,800 (initial cost $8,700), and paid $9,900 in cash one month after the purchase. The old equipment could have been sold for $400 at the date of trade. (The exchange has commercial substance.) (c) Pronghorn gave the vendor a $9,700 zero-interest-bearing note for the equipment on the date of purchase. The note was due in one year and was paid on time. Assume that the effective-interest rate in the market was 8%. Prepare the general journal entries required to record the acquisition and payment in each of the independent cases above. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts) No. Account Titles and Explanation Debit Credit (a) Equipment Accounts Payable (To record the purchase of equipment on account.) Accounts Payable Equipment Cash To record the payment on account.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting And Reporting A Global Perspective

Authors: Herve Stolowy, Yuan Ding, Luc Paugam

6th Edition

147376730X, 9781473767300

More Books

Students also viewed these Accounting questions

Question

=+Is it a site that explores new technology?

Answered: 1 week ago

Question

=+Where can you initiate a dialogue (when appropriate)?

Answered: 1 week ago

Question

=+ Does this site have scientific, medical, or legal advice?

Answered: 1 week ago