Question

Exercise 10-3 Pharoah 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. Pharoah 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 Pharoah carries in inventory. The computer system cost $30,840 and is normally sold by Pharoah for $39,064. Pharoah 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 Pharoah 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 Pharoah 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.

Answer 1

byeneral Journal Date 01-04-2017 Account fifle and explanation Truck 1 Debit ($) 35,723.00 cash (To record the purchase of truck 1) 35,423.00 Credit Tef Date 1-4-2017 Dehit ($ $ General Journal Accouly title and explanation Truck 2 ($ 35,980 + $5140 - $ 2970) | Discount on notes payable (35980 - 35980 1.09 38,150.00 2,970.00 5140.00 Cash Notes payable (To record the purchase of track 2) 35980.00 credit ($) Dote 11.4.2017 General Journal Taccount title and Denit ($) , explanation | Truck 3 39,064.00 cost of goods sold | 30,840.00 Inventory soles (to record purchase of 30,840.00 39,064.00 truck 3)

crealit 9,100.00 To General Jurnal Denit Account title and Date explanation Truck 4 (910x $13) 11,830.00 1-4-2017 common stock ( 910 X $ 10) paid in capital in excess of Bor ( 910 x $3) |(To record the purchase of truck 4, the truck 4 | has been acquired in excha se o koлeд commoh | Stock 2,730.00