Question

Bramble Corporation builds in-home theater systems. Bramble’s business is growing quickly. Therefore, the CEO, Paul Bramble, decides to purchase three new trucks on September 20, 2017. The terms of acquisition for each truck are described below.

1.		The first truck’s list price is $ 26,040. Bramble exchanges home theater equipment from its inventory for the truck. The home theater equipment cost Molitor $ 16,120.  Bramble normally sells the equipment for $ 24,490. Bramble uses a perpetual inventory system.
2.		The second truck has a list price of $ 27,280.  Bramble makes a down payment of $ 6,200 cash on this truck and signs a zero-interest-bearing note with a face amount of $ 21,080. Payment of the note is due September 20, 2018. Bramble would normally have to pay interest at a rate of 8% for such a borrowing.
3.		The list price of the third truck is $ 23,808. This truck is acquired in exchange for 1,488 shares of common stock in BrambleCorporation. The stock has a par value per share of $ 10 and a market price of $ 15 per share.

Prepare the appropriate journal entries for the above transactions for Bramble Corporation. (Round present value factors to 5 decimal places, e.g. 0.52587 and final answers to 2 decimal places, e.g. 5,275.50. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Answer 1

JOURNAL ENTRIES FOR BRAMBLE CORPORATION :

FIRST PURCHASE :

DATE	PARTICULARS	LF	DEBIT	CREDIT
	truck a/c dr		26040
	to inventory a/c			24490
	to gain on purchase of truck a/c			1550
	(being truck purchased and payment made through selling of inventory)

SECOND PUCHASE :

date	particulars	lf	debit	credit
	truck a/c dr		27280
	to cash a/c			6200
	to notes payable a/c			21080
	(being truck purchased and payment made on cash and zero interest payable on september)

THIRD PURCHASE :

date	particulars	lf	debit	credit
	truck a/c dr		23808
	to common stock a/c (1488 * 10)			14880
	to additional paid in capital a/c (1488 * 5)			7440
	to gain on purchase of truck a/c			1488
	(being truck purchased and with respective of common stock)