Oriole 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 $52,950 and is acquired for a cash payment of $49,067. | |
2. | Truck #2 has a list price of $56,480 and is acquired for a down payment of $7,060 cash and a zero-interest-bearing note with a face amount of $49,420. The note is due April 1, 2018. Oriole 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 $56,480. It is acquired in exchange for a computer system that Oriole carries in inventory. The computer system cost $42,360 and is normally sold by Oriole for $53,656. Oriole uses a perpetual inventory system. | |
4. | Truck #4 has a list price of $49,420. It is acquired in exchange for 960 shares of common stock in Oriole 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 Oriole 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. |
|||
No. | Accounts Titles and Explanation | Debit | Credit | |
1 | Truck | $49,067 | ||
Cash | $49,067 | |||
(To record purchase of truck) | ||||
2 | Truck | $52,399 | ($7,060 + $49,420/1.09) | |
Discount on Notes Payable | $4,081 | Balance | ||
Cash | $7,060 | |||
Notes Payable | $49,420 | |||
(To record purchase of truck) | ||||
3 | Truck | $53,656 | ||
Cost of Goods Sold | $42,360 | |||
Inventory | $42,360 | |||
Sales Revenue | $53,656 | |||
(To record purchase of truck) | ||||
4 | Truck | $12,480 | ||
Common Stock | $9,600 | (960 x $10) | ||
Paid-in Capital in Excess of Par-Common Stock | $2,880 | (960 x $3) | ||
(To record purchase of truck) | ||||
Oriole Corporation operates a retail computer store. To improve delivery services to customers, the company purchases fo...
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