Connors Corporation acquired manufacturing equipment for use in its assembly line. Below are four independent situations relating to the acquisition of the equipment. 1. The equipment was purchased on account for $30,000. Credit terms were 3/10, 1/30. 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 $32,000 one year from date of purchase. Th fair value of the equipment is not determinable. An interest rate of 12% properly reflects the time value of money in this situation 3. Connors traded in old equipment that had a book value of $8,500 (original cost of $19,000 and accumulated depreciation of $10,500) and paid cash of $27,000. The old equipment had a fair value of $4,500 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 $30,000 in cash. Required: For each of the above situations, prepare the journal entry required to record the acquisition of the equipment. Note: Use tables, Excel, or a financial calculator. If no entry is required for a transaction/event, select "No journal entry required" i the first account field. Round your answers to the nearest whole dollar. (FV of $1, PV of $1. FVA of $1, PVA of $1. FVAD of $1 and PVAD of $1)
Connors Corporation acquired manufacturing equipment for use in its assembly line. Below are four independent situations relating to the acquisition of the equipment. 1. The equipment was purchased on account for $30,000. Credit terms were 3/10, 1/30. 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 $32,000 one year from date of purchase. Th fair value of the equipment is not determinable. An interest rate of 12% properly reflects the time value of money in this situation 3. Connors traded in old equipment that had a book value of $8,500 (original cost of $19,000 and accumulated depreciation of $10,500) and paid cash of $27,000. The old equipment had a fair value of $4,500 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 $30,000 in cash. Required: For each of the above situations, prepare the journal entry required to record the acquisition of the equipment. Note: Use tables, Excel, or a financial calculator. If no entry is required for a transaction/event, select "No journal entry required" i the first account field. Round your answers to the nearest whole dollar. (FV of $1, PV of $1. FVA of $1, PVA of $1. FVAD of $1 and PVAD of $1)
Chapter11: Long-term Assets
Section: Chapter Questions
Problem 5EB: Steele Corp. purchases equipment for $30,000. Regarding the purchase, Steele paid shipping of...
Related questions
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College