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Garcia Corporation purchased a truck by issuing an $80,000, 4-year, zero-interes

ID: 2501427 • Letter: G

Question

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. (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.)

Account Titles and Explanation                Debit                      Credit  

_______________________            _____________      _______________  

_______________________           ______________      _______________

_______________________           ______________      ________________

Explanation / Answer

Truck account 80000

To Purchases account 80000

[ Being truck purchased with cash]

Interest account 8000

To truck account 8000

[ being interest due]