Question

Oriole Corporation operates a retail computer store. To improve delivery services to customers, the company purchases four new trucks on April 1, 2017. The terms of acquisition for each truck are described below.

1.		Truck #1 has a list price of $52,950 and is acquired for a cash payment of $49,067.
2.		Truck #2 has a list price of $56,480 and is acquired for a down payment of $7,060 cash and a zero-interest-bearing note with a face amount of $49,420. The note is due April 1, 2018. Oriole would normally have to pay interest at a rate of 9% for such a borrowing, and the dealership has an incremental borrowing rate of 8%.
3.		Truck #3 has a list price of $56,480. It is acquired in exchange for a computer system that Oriole carries in inventory. The computer system cost $42,360 and is normally sold by Oriole for $53,656. Oriole uses a perpetual inventory system.
4.		Truck #4 has a list price of $49,420. It is acquired in exchange for 960 shares of common stock in Oriole Corporation. The stock has a par value per share of $10 and a market price of $13 per share.

Prepare the appropriate journal entries for the above transactions for Oriole Corporation. (Round present value factors to 5 decimal places, e.g. 0.52587 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
1.
2.
3.
4.

Answer 1

No.	Accounts Titles and Explanation	Debit	Credit
1	Truck	$49,067
	Cash		$49,067
	(To record purchase of truck)
2	Truck	$52,399		($7,060 + $49,420/1.09)
	Discount on Notes Payable	$4,081		Balance
	Cash		$7,060
	Notes Payable		$49,420
	(To record purchase of truck)
3	Truck	$53,656
	Cost of Goods Sold	$42,360
	Inventory		$42,360
	Sales Revenue		$53,656
	(To record purchase of truck)
4	Truck	$12,480
	Common Stock		$9,600	(960 x $10)
	Paid-in Capital in Excess of Par-Common Stock		$2,880	(960 x $3)
	(To record purchase of truck)