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(Entries for Equipment Acquisitions) Jane Geddes Engineering Corporation purchased conveyor equipment with a list price of $10,000....

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Accounting

(Entries for Equipment Acquisitions) Jane Geddes EngineeringCorporation purchased conveyor equipment with a list price of$10,000. The vendors credit terms were 2/10, n/30. Presented beloware two independent cases related to equipment. Assume that thepurchases of equipment are recorded gross. (Round to nearestdollar)

a.) Geddes paid cash for the equipment 8 days after the purchase.The vendor's credit terms are 2/10, n/30. Assume equipmentpurchases are initially recorded gross.
b.) Geddes traded in equipment with a book value of $2,000 (initialcost $8,000) and paid $9,500 in case one month after the purchase.The old equipment could have been sold for $400 at the date oftrade. Assume the exchange has commercial substance.

c.) Geddes gave the vendor a $10,800 zero-interest-bearing notefor the equipment on the date of purchase. The note was due in oneyear and was paid on time. Assume that the effective-interest ratein the market was 9%

Instructions
Prepare the general journal entries required to record theacquisition and payment in cash of the independent cases above.Round to the nearest dollar.

Answer & Explanation Solved by verified expert
3.9 Ratings (757 Votes)

(a)
01-Apr Equipment (+A) 10000
    Accounts Payable (+L) 10000
08-Apr Accounts Payable (-L) 10000
   Equipment(-A) 200 (10000*2%)
    Cash (-a) 9800
(b) Accumulated Depreciaton (-xa) 6000 (8000-2000)
New machinery (+A) 9900 (9500+400)
Loss on Disposal (+E) 1600
Old machine (-A) 8000
Accounts payable (+L) 9500
Cost 8000
less:acc dep 6000
book values 2000
less:fair value(old) -400
loss on disposal 1600
(c) 01-Apr Equipment (+A) 9908.00 (10000*.91743)
    Discount on N/P (+xL) 892.00 (10800-9908)
    Notes Payable (+L) 10800
Apr-15 Notes Payable (-L) 10800
Interest Expense (+E) 892
     Cash (+a) 10800
    Discount on N/P (-xL) 892

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