Question

BE10.5 (LO 3) Garcia Corporation purchased a truck by issuing an $80,000, 4-year, zero-interest-bearing note to Equinox Inc. The market rate of interest for obligations of this nature is 10%. Prepare the journal entry to record the purchase of this truck

BE10.6 (LO 3) Mohave Inc. purchased land, building, and equipment from Laguna Corporation for a cash payment of $315,000. The estimated fair values of the assets are land $60,000, building $220,000, and equipment $80,000. At what amounts should each of the three assets be recorded?

Answer 1

BRIEF EXERCISE 10-5

Trucks ($80,000 X .68301)	54,641
Discount on Notes Payable	25,359
Notes Payable		80,000

BRIEF EXERCISE 10-6

	Fair Value		% of Total		Cost		Recorded Amount
Land	$  60,000		60/360	X	$315,000		$  52,500
Building	220,000		220/360	X	$315,000		192,500
Equipment	80,000		80/360	X	$315,000		70,000
	$360,000						$315,000