Question

Exerclse 10-19 (Algo) Acquisition cost; multiple methods [LO10-1, 10-3, 10-4, 10-6] Connors Corporation acquired manufacturing equipment for use in its assembly line. Below are four independentsituations relating to the acquisition of the equipment. (FV of $1, PV of $1, FVA of $1. PVA of $1, FVAD of $1 and PVAD of $1) (Usse approprlate factor(s) from the tables provided.) 1. The equipment was purchased on account for $37,000. Credit terms were 3/10. n/30. Payment was made within the discount period and the company records the purchases of equipment net of discounts. 2 Connors gave the seller a noninterest-bearing note. The note required payment of $39.000 one year from date of purchase. The fair value of the equipment is not determinable. An interest rate of 10% properly reflects the time value of money in this situation 3. Connors traded in old equipment that had a book value of $12.000 (original cost of $26,000 and accumulated depreciation of $14.000) and paid cash of $34,000. The old equipment had a fair value of $7,300 on the date of the exchange. The exchange has commercial substance. 4. Connors issued 1,500 shares of its no-par common stock in exchange for the equipment. The market value of the common stock was not determinable. The equipment could have been purchased for $36.000 in cash Requlred: For each of the above situations, prepare the journal entry required to record the acquisition of the equipment. (If no entry is required for a transactlon/event, select "No journal entry required" In the first account fleld. Round your answers to the nearest whole dollar amount.) View transaction list Journal entry worksheet <123 4 Record the acquisition of equipment by the issuance of stock Note: Enter debits before credits General Journal Transaction Debit Credit 4 View general journal Record entry Clear entry

Answer 1

Answer:

Event	Account titles and Explanation	Debit ($)	Credit ($)
1	Equipment(37000×97%)	$35,890
	Cash		$35,890
	(To record Equipment Purchased on cash)
2	Equipment($39000/1.10)	35,455
	Discount on Notes Payable	3,545
	Notes payable		39,000
	(To record Equipment Purchased )
3	Equipment-New(34000+7300)	41,300
	Loss on Equipment	4,700
	Accumulated depreciation	14,000
	Cash		34,000
	Equipment-old		26,000
	( To record Equipment Purchased Exchange of old one)
4	Equipment	36,000
	Common stock		36,000
	( To record Equipment Purchased Exchange in          Common stock)