Bramble Corporation builds in-home theater systems. Bramble’s business is growin

Question

Bramble Corporation builds in-home theater systems. Bramble’s business is growing quickly. Therefore, the CEO, Paul Bramble, decides to purchase three new trucks on September 20, 2017. The terms of acquisition for each truck are described below.

1. The first truck’s list price is $26,040. Bramble exchanges home theater equipment from its inventory for the truck. The home theater equipment cost Molitor $16,120. Bramble normally sells the equipment for $24,490. Bramble uses a perpetual inventory system.

2. The second truck has a list price of $27,280. Bramble makes a down payment of $6,200 cash on this truck and signs a zero-interest-bearing note with a face amount of $21,080. Payment of the note is due September 20, 2018. Bramble would normally have to pay interest at a rate of 8% for such a borrowing.

3. The list price of the third truck is $23,808. This truck is acquired in exchange for 1,488 shares of common stock in Bramble Corporation. The stock has a par value per share of $10 and a market price of $15 per share.

Prepare the appropriate journal entries for the above transactions for Bramble Corporation

Explanation / Answer

2. 2017

Sep 20 Truck A/c Dr $ 27280

To Cash A/c $ 6200

To Note Payable $ 21080

2018

SeP 20 Notes payable A/c Dr $ 21080

Interest A/c Dr $ 1686 ( 8% of 21080)

To Cash A/c 22766

3)

Truck A/c Dr $ 22320   

To Common stck $ 14880

To Premium on issue of common stock $ 7440

( Truck list price = 23808 but against this issue common stock of value 1488*15 = 22320

Balance discount 1488)

1) Truck A/c Dr $ 16120

To COGS $ 16120

COGS A/c Dr $ 16120

To Inventory $ 16120

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

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