Question

Exercise 10-3

Buffalo 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. Buffalo 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 Buffalo carries in inventory. The computer system cost $30,840 and is normally sold by Buffalo for $39,064. Buffalo 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 Buffalo 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 Buffalo 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.

List of Accounts

Accounts Payable
Accumulated Depreciation-Building
Accumulated Depreciation-Equipment
Accumulated Depreciation-Machinery
Accumulated Depreciation-Trucks
Buildings
Cash
Common Stock
Contribution Revenue
Cost of Goods Sold
Depreciation Expense
Direct Labor
Discount on Notes Payable
Equipment
Factory Overhead
Gain on Disposal of Buildings
Gain on Disposal of Equipment
Gain on Disposal of Machinery
Gain on Disposal of Trucks
Insurance Expense
Interest Expense
Inventory
Land
Land Improvements
Loss on Disposal of Buildings
Loss on Disposal of Equipment
Loss on Disposal of Machinery
Loss on Disposal of Trucks
Machinery
Maintenance and Repairs Expense
Materials
No Entry
Notes Payable
Organization Expense
Paid-in Capital in Excess of Par - Common Stock
Prepaid Insurance
Retained Earnings
Salaries and Wages Expense
Sales Revenue
Trading Securities
Trucks

Answer 1

No	Account Titles and Explanation	Debit	Credit
1	Truck	35,723
	Cash		35,723
2	Truck	37,849
	Discount on note payable	3,271
	Cash		5,140
	Note payable		35,980
	.90909 *35980+5140
3	Truck	39,064
	Cost of goods sold	30,840
	Inventory		30,840
	Sales Revenue		39,064
4	Trucks 13*910	11,830
	Common Stock 910*10		9,100
	Paid-in Capital in Excess of Par-Common Stock		2,730