Need some help with the question attached as images, thank you! Question 1 Kelly

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Need some help with the question attached as images, thank you!

Question 1 Kelly Clarkson Corporation operates a retail computer store. To improve delivery services to customers, the company purchases four new trucks on April 1, 2014. The terms of acquisition for each truck are described below 1. Truck #1 has a list price of $50,250 and is acquired for a cash payment of $46,565. 2. Truck #2 has a list price of $53,600 and is acquired for a down payment of $6,700 cash and a zero-interest-bearing note with a face amount of $46,900. The note is due April 1, 2015, Clarkson would normally have to pay interest at a rate of 10% for such a borrowing, and the dealership has an incremental borrowing rate of 8%. 3. Truck #3 has a list price of $53,600. It is acquired in exchange for a computer system that Clarkson carries in inventory. The computer system cost $40,200 and is normally sold by Clarkson for $50,920. Clarkson uses a perpetual inventory system. 4. Truck #4 has a list price of $46,900. It is acquired in exchange for 1,080 shares of common stock in Clarkson Corporation. The stock has a par value per share of $10 and a market price of $13 per share. Prepare the appropriate journal entries for the above transactions for Clarkson Corporation. (Round present value factors to 5 decimal places, e.g. 0.52500 and final 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 O for the amounts.)

Explanation / Answer

No                                Account titles and explanations                                      Debit                     Credit

1                          Truck   A/c Dr                                                           46,565

                                           To    Cash A/c                                                                                       46,565        

                                (Being truckacquired by paying cash)

2                              Truck    A/c          Dr                                                          49,336

                                Interest expense                                                                 4,264

                                          To    Cash    A/c          6,700

   To Notes payable              A/c                                                                   46,900

                           (Being assets acquired by paying cash and exchange of note payable

                            Present value of consideration is capitalised)

3                      Truck   A/c           Dr                                                                             40,200                                       To   Inventory A/c                                                                                           40,200

                       (Being assets acquired by exchange of inventory )

4                    Truck       A/c                   Dr                        14,040

To Common stock 10,800

To Additional paid in capital    3,240                 (Being assets acquired by exchange of shares)

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