Exercise 10-3

Buffalo Corporation operates a retail computer store. To improve delivery services to customers, the company purchases four new trucks on April 1, 2017. The terms of acquisition for each truck are described below.

1.		Truck #1 has a list price of $38,550 and is acquired for a cash payment of $35,723.
2.		Truck #2 has a list price of $41,120 and is acquired for a down payment of $5,140 cash and a zero-interest-bearing note with a face amount of $35,980. The note is due April 1, 2018. Buffalo would normally have to pay interest at a rate of 9% for such a borrowing, and the dealership has an incremental borrowing rate of 8%.
3.		Truck #3 has a list price of $41,120. It is acquired in exchange for a computer system that Buffalo carries in inventory. The computer system cost $30,840 and is normally sold by Buffalo for $39,064. Buffalo uses a perpetual inventory system.
4.		Truck #4 has a list price of $35,980. It is acquired in exchange for 910 shares of common stock in Buffalo Corporation. The stock has a par value per share of $10 and a market price of $13 per share.

Prepare the appropriate journal entries for the above transactions for Buffalo Corporation. (Round present value factors to 5 decimal places, e.g. 0.52587 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 0 for the amounts.)

No.	Account Titles and Explanation	Debit	Credit
1.
2.
3.
4.

List of Accounts

Accounts Payable Accumulated Depreciation-Building Accumulated Depreciation-Equipment Accumulated Depreciation-Machinery Accumulated Depreciation-Trucks Buildings Cash Common Stock Contribution Revenue Cost of Goods Sold Depreciation Expense Direct Labor Discount on Notes Payable Equipment Factory Overhead Gain on Disposal of Buildings Gain on Disposal of Equipment Gain on Disposal of Machinery Gain on Disposal of Trucks Insurance Expense Interest Expense Inventory Land Land Improvements Loss on Disposal of Buildings Loss on Disposal of Equipment Loss on Disposal of Machinery Loss on Disposal of Trucks Machinery Maintenance and Repairs Expense Materials No Entry Notes Payable Organization Expense Paid-in Capital in Excess of Par - Common Stock Prepaid Insurance Retained Earnings Salaries and Wages Expense Sales Revenue Trading Securities Trucks