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Right Now, Inc. purchases a large piece of equipment from ARCSOFT Corp. The terms of the...

Right Now, Inc. purchases a large piece of equipment from ARCSOFT Corp. The terms of the purchase call for Right Now to take delivery of the equipment on June 1 , 2016 upon transfer of $50,000 to ARCSOFT on that same day. Additional payments of $200,000 is to be paid by Right Now to ARCSOFT on June 1, 2017 and June 1, 2018. The equipment will be usable upon delivery with no further involvement by ARCSOFT. Both companies only make adjusting entries at the end of the year. The normal borrowing rate for Right Now is 8%.

What journal entries should Right Now and ARCSOFT make on:

June 1, 2016

Dec 31, 2016

Dec 31, 2017

June 1, 2018

Solutions

Expert Solution

Right Now.Inc
Date Account Title Debit Credit
JUNE 1,2016 ARCSOFT Account $   50,000.00
JUNE 1,2016 Bank $   50,000.00
Dec 31,2016 Rent Expense $      4,000.00
Dec 31,2016 Lease liability (accrete interest) $      4,000.00
Dec 31,2017 Rent Expense $   20,000.00
Dec 31,2017 Lease liability (accrete interest) $   20,000.00
June 1,2018 ARCSOFT Account $ 200,000.00
June 1,2018 ARCSOFT Account Payables $ 200,000.00
ARCSOFT
Date Account Title Debit Credit
JUNE 1,2016 Bank $   50,000.00
JUNE 1,2016 Right Now,Inc $   50,000.00
Dec 31,2016 Lease income Receivables $      4,000.00
Dec 31,2016 Rental income $      4,000.00
Dec 31,2017 Lease income Receivables $   20,000.00
Dec 31,2017 Rental income $   20,000.00
June 1,2018 Right Now,Inc -Receivables $ 200,000.00
June 1,2018 Right Now,Inc $ 200,000.00

it is wrong answser .Sorry

ekkarill92 answered 2 years ago
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