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E10-3 (Acquisition Costs of Trucks) Kelly Clarkson Corporation operates a retail computer store. To im- prove delivery services to customers, the company purchases four new trucks on April 1, 2014. The terms of acquisition for each truck are described below.;Instructions;Prepare the appropriate journal entries for the above transactions for Clarkson Corporation.;1.Truck #1 has a list price of $15,000 and is acquired for a cash payment of $13,900. 2.Truck #2 has a list price of $16,000 and is acquired for a down payment of $2,000 cash and a zero- interest-bearing note with a face amount of $14,000. 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 incre-;mental borrowing rate of 8%. 3.Truck #3 has a list price of $16,000. It is acquired in exchange for a computer system that Clarkson;carries in inventory. The computer system cost $12,000 and is normally sold by Clarkson for $15,200.;Clarkson uses a perpetual inventory system. 4.Truck #4 has a list price of $14,000. It is acquired in exchange for 1,000 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.

 

Paper#74450 | Written in 18-Jul-2015

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