Lankford Corporation operates a retail computer store. To improve delivery services to customers, the company purchases four new trucks on April 1, 2020. The terms of acquisition for each truck are described below. Truck #1 has a list price of $37,500 and is acquired for a cash payment of $34,750. Truck #2 has a list price of $40,000 and is acquired for a down payment of $5,000 cash and a zero-interest-bearing note with a face amount of $35,000. The note is due April 1, 2021. Lankford would normally have to pay interest at a rate of 8% for such a borrowing, and the dealership has an incremental borrowing rate of 6%. Truck #3 has a list price of $40,000. It is acquired in exchange for a computer system that Lankford carries in inventory. The computer system cost $30,000 and is normally sold by Lankford for $38,000. Lankford uses a perpetual inventory system. T ruck #4 has a list price of $35,000. It is acquired in exchange for 1,000 shares of common stock in Lankford Corporation. Lankford’s stock is actively traded. The stock has a par value per share of $10 and a market value of $26 per share. Prepare the appropriate journal entries for the foregoing transactions for Lankford Corporation. (Round computations to the nearest dollar).

Question

Lankford Corporation operates a retail computer store. To improve delivery services to customers, the company purchases four new trucks on April 1, 2020. The terms of acquisition for each truck are described below.

  1. Truck #1 has a list price of $37,500 and is acquired for a cash payment of $34,750.
  2. Truck #2 has a list price of $40,000 and is acquired for a down payment of $5,000 cash and a zero-interest-bearing note with a face amount of $35,000. The note is due April 1, 2021. Lankford would normally have to pay interest at a rate of 8% for such a borrowing, and the dealership has an incremental borrowing rate of 6%.
  3. Truck #3 has a list price of $40,000. It is acquired in exchange for a computer system that Lankford carries in inventory. The computer system cost $30,000 and is normally sold by Lankford for $38,000. Lankford uses a perpetual inventory system.
  4. T ruck #4 has a list price of $35,000. It is acquired in exchange for 1,000 shares of common stock in Lankford Corporation. Lankford’s stock is actively traded. The stock has a par value per share of $10 and a market value of $26 per share.

Prepare the appropriate journal entries for the foregoing transactions for Lankford Corporation. (Round computations to the nearest dollar).

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