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Novak Corporation operates a retail computer store. To improve delivery services to customers, the company purchases four new trucks on April 1, 2020. The terms
Novak Corporation operates a retail computer store. To improve delivery services to customers, the company purchases four new trucks on April 1, 2020. The terms of acquisition for each truck are described below.
1. | Truck #1 has a list price of $34,950 and is acquired for a cash payment of $32,387. | |
2. | Truck #2 has a list price of $37,280 and is acquired for a down payment of $4,660 cash and a zero-interest-bearing note with a face amount of $32,620. The note is due April 1, 2021. Novak would normally have to pay interest at a rate of 10% for such a borrowing, and the dealership has an incremental borrowing rate of 8%. | |
3. | Truck #3 has a list price of $37,280. It is acquired in exchange for a computer system that Novak carries in inventory. The computer system cost $27,960 and is normally sold by Novak for $35,416. Novak uses a perpetual inventory system. | |
4. | Truck #4 has a list price of $32,620. It is acquired in exchange for 1,030 shares of common stock in Novak 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 Novak Corporation.
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