Question
Asked Feb 11, 2020
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Garcia Corporation purchased a truck by issuing an $80,000, 4-year, zero-interest-bearing note to Equinox Inc. The market rate of interest for obligations of this nature is 10%. Prepare the journal entry to record the purchase of this truck.

 

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Expert Answer

Step 1

Acquisition costs of trucks: Cost of trucks include purchase price (not list price) and any other costs on making the truck fit for use. This includes any one time costs incurred prior to the usage of the truck, like the accessories used. Sometimes trucks are not obtained by payment of cash but in exchange of shares o...

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