Question

Exercise 10-03

Metlock 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 $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, 2021. Metlock 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 Metlock carries in inventory. The computer system cost $30,840 and is normally sold by Metlock for $39,064. Metlock 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 Metlock 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 Metlock Corporation. (Round present value factors to 5 decimal places, e.g. 0.52587 and final answers to 2 decimal places, e.g. 52.75. 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.)

Debit Credit No. Account Titles and Explanation 1. Trucks 35723元 1 cash 35723 Trucks 38149.17元 Discount on Notes Payable 2970.8 Trash 5140 1 notes payable 35980 trucks 它巴巴PP飞飞飞飞飞飞乎 尼泥泥兄兄兄兄兄兄兄兄日 Cost of Goods Sold T inventory 30840 sales revenue 39064 Trucks common stock 9100 T Paid-in Capital in Exces 2730

PLEASE SHOW ALL WORK

Answer 1

$38.149.13 $2.970.87 2) Truck Discount on notes payable Cash Notes Payable (To record acquisition of truck) $5.140.00 $35.980.00 Workings: Compute the present value of the zero-rated note: Present Value = Principal amount * (1 + Interest rate)^-period = $35,980 * (1 + 0.09)-1 = $35,980 * 0.91743 = $33,009.13 Discount on notes payable = $35,980.00 - $33,009.13 = $2.970.87 Value of the truck = Cash paid + Present value of the note = $5.140 + $33,009.13 = $38.149.13 Note: I have only attempted error (cross) figures.