Exercises: April 1st 2020, purchases 4 new trucks

Truck 1: price of 15,000 and cash payment of 13,900

Dr Truck 13,900

Cr Cash 13,900

Truck 2: price of 16,000 and down payment of 2,000 cash and a zero – interest – bearing note with a
face amount of 14,000. The note due April 1, 2021. Pay interest at a rate of 10% for such a borrowing

Dr Truck 14,727.27 (PV of truck = PV of 14,000 + 2,000 = 14,000(1+10%) -1 + 2000)

Dr Discount on note payable 1,272.73

Cr Cash 2000

Cr Note Payable 14,000

Truck 3: price 16,000. Exchange for a computer system carried in inventories. The computer system
cost 12,000 and normally sold for 15,200. Uses perpetual inventory system.

Dr Truck 15,200

Dr COGS 12,000

Cr Inventory 12,000

Cr sales revenue 15,200

Truck 4: price 14,000. Exchange for 1,000 shares of common stock. Par value per share 10 and market
price per share 13

Dr Truck 13,000

Cr Common Stock 10,000

Cr Pain – in capital in excess 3, 000