Jane Geddes Engineering Corporation purchased conveyor equipment with a list pri

Question

Jane Geddes Engineering Corporation purchased conveyor equipment with a list price of $16,000. Presented below are three independent cases related to the equipment.

Prepare the general journal entries required to record the acquisition and payment in each of the independent cases above. (Round 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

(a)

(To record the puchase of equipment on account.)

(To record the payment on account.)

(b)

(To record the puchase of equipment on account.)

(To record the payment on account.)

(c)

(To record the puchase of equipment with a note.)

(To record the payment of the note.)

(a) Geddes paid cash for the equipment 8 days after the purchase. The vendor’s credit terms are 2/10, n/30. Assume that equipment purchases are initially recorded gross. (b) Geddes traded in equipment with a book value of $2,160 (initial cost $8,350), and paid $14,240 in cash one month after the purchase. The old equipment could have been sold for $420 at the date of trade. (The exchange has commercial substance.) (c) Geddes gave the vendor a $17,100 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%.

Explanation / Answer

Answer:(a)

Equipment A/C Dr. $16000

    To Accounts Payable A/C            $16000

Accounts Payable A/C Dr. $16000

        To Equipment A/C                       $320

        To cash                                      $15680

Answer:(b)

Equipment A/C Dr. ($14240+$420)   $14660

Loss on Disposal of Equipment A/C Dr. $1740

Accumulated dep A/C                      Dr. $6190

     To Accounts Payable A/C                               $14240

     To Equipment A/C                                          $8350

Accounts Payable A/C Dr. $14240

   To cash                                      $14240

Answer:(c)

Equipment A/C Dr. $15688

Discount on notes payable A/C Dr. $1412

        To Notes Payable A/C                              $17100

Interest expense A/C Dr.1412

Notes payable A/C Dr. $17100

       To Discount on notes payable A/C                    $1412

        To cash A/C                                                   $17100

Related Questions

Navigate

• Browse (All)
• Browse J
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.