(Entries for Equipment Acquisitions) Jane Geddes Engineering Corporation purchased conveyor equipment with a list price of...

(Entries for Equipment Acquisitions) Jane Geddes Engineering Corporation purchased conveyor equipment with a list price of $10,000. The vendors credit terms were 2/10, n/30. Presented below are two independent cases related to equipment. Assume that the purchases of equipment are recorded gross. (Round to nearest dollar)

a.) Geddes paid cash for the equipment 8 days after the purchase. The vendor's credit terms are 2/10, n/30. Assume equipment purchases are initially recorded gross.
b.) Geddes traded in equipment with a book value of $2,000 (initial cost $8,000) and paid $9,500 in case one month after the purchase. The old equipment could have been sold for $400 at the date of trade. Assume the exchange has commercial substance.

c.) Geddes gave the vendor a $10,800 zero-interest-bearing note for the equipment on the date of purchase. The note was due in one year and was paid on time. Assume that the effective-interest rate in the market was 9%

Instructions
Prepare the general journal entries required to record the acquisition and payment in cash of the independent cases above. Round to the nearest dollar.

Expert Solution

(a)
	01-Apr	Equipment (+A)	10000
		Accounts Payable (+L)		10000
	08-Apr	Accounts Payable (-L)	10000
		Equipment(-A)		200	(10000*2%)
		Cash (-a)		9800

(b)		Accumulated Depreciaton (-xa)		6000	(8000-2000)
		New machinery (+A)		9900	(9500+400)
		Loss on Disposal (+E)		1600
			Old machine (-A)		8000
			Accounts payable (+L)		9500

		Cost	8000
		less:acc dep	6000
		book values	2000
		less:fair value(old)	-400
		loss on disposal	1600


(c)	01-Apr	Equipment (+A)	9908.00	(10000*.91743)
		Discount on N/P (+xL)	892.00	(10800-9908)
		Notes Payable (+L)		10800
	Apr-15	Notes Payable (-L)	10800
		Interest Expense (+E)	892
		Cash (+a)		10800
		Discount on N/P (-xL)		892

ekkarill92 answered 1 year ago

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