Truck #1 has a list price of $20,550 and is acquired for a cash payment of $19,043. 2. Truck #2 has a list price of $21,920 and is acquired for a down payment of $2,740 cash and a zero-interest-bearing note with a face amount of $19,180. The note is due April 1, 2021. Pharoah would normally have to pay interest at a rate of 10% for such a borrowing, and the dealership has an incremental borrowing rate of 8%. 3. Truck #3 has a list price of $21,920. It is acquired in exchange for a computer system that Pharoah carries in inventory. The computer system cost $16,440 and is normally sold by Pharoah for $20,824. Pharoah uses a perpetual inventory system. 4. Truck #4 has a list price of $19,180. It is acquired in exchange for 1,090 shares of common stock in Pharoah Corporation. The stock has a par value per share of $10 and a market price of $13 per share. Pre
Truck #1 has a list price of $20,550 and is acquired for a cash payment of $19,043. 2. Truck #2 has a list price of $21,920 and is acquired for a down payment of $2,740 cash and a zero-interest-bearing note with a face amount of $19,180. The note is due April 1, 2021. Pharoah would normally have to pay interest at a rate of 10% for such a borrowing, and the dealership has an incremental borrowing rate of 8%. 3. Truck #3 has a list price of $21,920. It is acquired in exchange for a computer system that Pharoah carries in inventory. The computer system cost $16,440 and is normally sold by Pharoah for $20,824. Pharoah uses a perpetual inventory system. 4. Truck #4 has a list price of $19,180. It is acquired in exchange for 1,090 shares of common stock in Pharoah Corporation. The stock has a par value per share of $10 and a market price of $13 per share. Pre
Chapter5: Introduction To Business Expenses
Section: Chapter Questions
Problem 63P
Related questions
Question
Pharoah 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 $20,550 and is acquired for a cash payment of $19,043. | |
| 2. | Truck #2 has a list price of $21,920 and is acquired for a down payment of $2,740 cash and a zero-interest-bearing note with a face amount of $19,180. The note is due April 1, 2021. Pharoah would normally have to pay interest at a rate of 10% for such a borrowing, and the dealership has an incremental borrowing rate of 8%. | |
| 3. | Truck #3 has a list price of $21,920. It is acquired in exchange for a computer system that Pharoah carries in inventory. The computer system cost $16,440 and is normally sold by Pharoah for $20,824. Pharoah uses a perpetual inventory system. | |
| 4. | Truck #4 has a list price of $19,180. It is acquired in exchange for 1,090 shares of common stock in Pharoah Corporation. The stock has a par value per share of $10 and a market price of $13 per share. |
Prepare the appropriate
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