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In: Accounting

BE10.5 (LO 3) Garcia Corporation purchased a truck by issuing an $80,000, 4-year, zero-interest-bearing note to Equinox Inc

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?

Solutions

Expert Solution

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

 

 

 

devender singh answered 3 years ago
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