Flint Engineering Corporation purchased conveyor equipment with a list price of

Question

Flint Engineering Corporation purchased conveyor equipment with a list price of $9,400. Presented below are three independent cases related to the equipment.

Prepare the general journal entries required to record the acquisition and payment in each of the independent cases above. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 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 0 for the amounts.)

No.

Account Titles and Explanation

Debit

Credit

(a)

(To record the purchase of equipment on account.)

(To record the payment on account.)

(b)

(To record the purchase of equipment on account.)

(To record the payment on account.)

(c)

(To record the purchase of equipment with a note.)

(To record the payment of the note.)

(a) Flint 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. (b) Flint traded in equipment with a book value of $2,200 (initial cost $7,800), and paid $8,700 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.) (c) Flint gave the vendor a $9,800 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%.

Explanation / Answer

S.No.

Account Titles

Debit

Credit

(a).

Equipment

$9400

      Accounts Payable

$9400

(To record the purchase of equipment on account.)

Accounts Payable

$9400

     Cash

$9212

     Equipment ($9400 * 0.02)

$188

(To record the payment on account.)

(b).

Equipment (New) $8700 + $400

$9100

Loss on Disposal of Equipment

$1800

Accumulated Depreciation Equipment

$5600

     Accounts Payable

$8700

     Equipment (Old)

$7800

(To record the purchase of equipment on account.)

Accounts Payable

$9400

     Cash

$9212

(To record the payment on account.)

(C).

Equipment ($9800 * .92592)

$9074

Discount on Notes Payable

$726

      Notes Payable

$9800

(To record the purchase of equipment with a note.)

Interest Expense

$726

Notes Payable

$9800

     Discount on Notes Payable

$726

     Cash

$9800

(To record the payment of the note.)

S.No.

Account Titles

Debit

Credit

(a).

Equipment

$9400

      Accounts Payable

$9400

(To record the purchase of equipment on account.)

Accounts Payable

$9400

     Cash

$9212

     Equipment ($9400 * 0.02)

$188

(To record the payment on account.)

(b).

Equipment (New) $8700 + $400

$9100

Loss on Disposal of Equipment

$1800

Accumulated Depreciation Equipment

$5600

     Accounts Payable

$8700

     Equipment (Old)

$7800

(To record the purchase of equipment on account.)

Accounts Payable

$9400

     Cash

$9212

(To record the payment on account.)

(C).

Equipment ($9800 * .92592)

$9074

Discount on Notes Payable

$726

      Notes Payable

$9800

(To record the purchase of equipment with a note.)

Interest Expense

$726

Notes Payable

$9800

     Discount on Notes Payable

$726

     Cash

$9800

(To record the payment of the note.)

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

---

---

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