Jane Geddes Engineering Corporation purchased conveyor equipment with a list pri

Question

Jane Geddes Engineering Corporation purchased conveyor equipment with a list price of $15,700. Presented below are three independent cases related to the equipment. 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. Geddes traded in equipment with a book value of $2,390 (initial cost $8,630), and paid $13,890 in cash one month after the purchase. The old equipment could have been sold for $400 at the date of trade. (The exchange has commercial substance.) Geddes gave the vendor a $17,330 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 8%. 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 requiredselect "No Entry" for the account titles and enter 0 for the amounts.) (To record the puchase of equipment on account.) (To record the payment on account.) (To record the puchase of equipment on account.) (To record the payment on account.) (To record the puchase of equipment with a note.)

Explanation / Answer

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*17330/108*100=16046

Ans- To Record purchase of equipment on account- Equipment    15,700.00 Accounts Payable    15,700.00 To record payment of Accounts Payable Accounts Payable    15,700.00 Equipment (2% Discount)          314.00 Cash    15,386.00 To Record purchase of equipment on exchange- Accumulated Deprication      6,240.00 Loss on disposal of assets      1,990.00 Equipment-new (13890+400)    14,290.00 Equipment      8,630.00 Account Payable    13,890.00 To record payment of Accounts Payable Accounts Payable      8,630.00 Cash      8,630.00 To Record purchase of equipment on account- Equipment          16,046 Discount On Notes Payable            1,284 Note Payable 17330 To record payment of Accounts Payable Interest Expenses            1,284 Note Payable 17330 Discount On Note Payable            1,284 Cash 17330

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