Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Kelly Clarkson Corporation operates a retail computer store. To improve delivery services to customers, the company purchases four new trucks on April 1, 2017. The
Kelly Clarkson 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 | |||||
List price | $ 15,000 | |||||
Cash acquisition cost | 13,900 | |||||
2. | Truck #2 | |||||
List price | $ 16,000 | |||||
Acquisition cost | ||||||
Cash down payment | 2,000 | |||||
Face amount of zero-interest bearing note assumed | 14,000 | |||||
Note due date | April 1, 2018 | |||||
Normal interest rate for this borrowing | 10% | |||||
Incremental borrowing rate | 8% | |||||
3. | Truck #3 | |||||
List price | $ 16,000 | |||||
Acquired in exchange for a computer system that Clarkson carries in inventory | ||||||
Cost of computer system in inventory | 12,000 | |||||
Normal selling price of computer system by Clarkson | 15,200 | |||||
Inventory system used by Clarkson | Perpetual | |||||
4. | Truck #4 | |||||
List price | $ 14,000 | |||||
Acquired in exchange for common stock in Clarkson Corporation | 1,000 shares | |||||
Par value of common stock per share | $ 10.00 | |||||
Market value of common stock per share | $ 13.00 | |||||
Instructions: | ||||||
Prepare the appropriate journal entries for the above transactions for Clarkson Corporation. | ||||||
Debit | Credit | |||||
1 | ||||||
2 | Hint: Use the Excel Present Value formula. | |||||
3 | ||||||
4 | ||||||
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started