Connors Corporation acquired manufacturing equipment for use in its assembly lin

Question

Connors Corporation acquired manufacturing equipment for use in its assembly line. Below are four independent situations relating to the acquisition of the equipment. (EV of $1. PV of S1. FVA of S1. PVA of $1. EVAD of $1 and PVAD of $1 (Use appropriate factor(s) from the tables provided.) t The equipment was purchased on account for $25,000. Credit terms were 2/10, n/30. Payment was made within the discount period and the company records the purchases of equipment net of discounts onnors gave the seller a noninterest-bearing note. The note required payment of $27000 one year from date of purchase. The fair value of the equipment is not determinable. An interest properly reflects the time value of money in this situation 3 Connors traded in old equipment that had a book value of $6,000 (original cost of $14,000 and accumulated depreciation of 4 Connors issued 1,000 shares of its nopar common stock in exchange for the equipment. The market value of the common stock For each of the above situations, prepare the journal entry required to record the acquisition of the equipment. (If no entry is required $8,000) and paid cash of $22.000. The old equipment had a fair value of $2.500 on the date of the exchange. The exchange has commercial substance was not determinable. The equipment could have been purchased for $24.000 in cash. es Required: for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest whole dollar amount)

Explanation / Answer

SOLUTION

*Equipment - Present value of $1: n = 1, i = 10%

PV = $27,000 * (0.90909) = $24,545

** Equipment - New

($2,500 + 22,000) = $24,500

*** Loss = ($6,000 - 2,500) = $3,500

S.No. Account titles and Explanation Debit ($) Credit ($) 1. Equipment [$25,000 - ($25,000*2%)] 24,500 Accounts payable 24,500 2. Equipment* 24,545 Discount on note payable 2,455 Note payable 27,000 3. Equipment - New** 24,500 Loss*** 3,500 Accumulated depreciation 8,000 Cash 22,000 Equipment - Old 14,000 4. Equipment 24,000 Common stock 24,000

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

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