Song Engineering purchased conveyor equipment with a list price of won 15,000.

(2 customer reviews)

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Complete Solution:

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Description

QUESTION:

Song Engineering purchased conveyor equipment with a list price of won 15,000. Presented below are three independent cases related to the equipment (amounts in thousands).

a. Song paid cash for the equipment 8 days after the purchase. The vendor’s credit terms are 2/10, n/30. Assume that equipment purchases are initially recorded gross.

b. Song traded in equipment with a book value of won 2,000 (initial cost won 8,000) and paid won 14,200 in cash one month after the purchase. The old equipment could have been sold for 400 at the date of the trade. (The exchange has commercial substance.)

c. Song gave the vendor a won 16,200, zero-interest-bearing note for the equipment on the date of purchase. The note was due in 1 year and was paid on time. Assume that the effective interest rate in the market was 9%.

Instructions:

Prepare the general journal entries required to record the acquisition and payment in each of the independent cases above. (Round to the nearest one.)


2 reviews for Song Engineering purchased conveyor equipment with a list price of won 15,000.

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