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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.
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4

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