Exercise 10-3
Pina Corporation operates a retail computer store. To improve delivery services to customers, the company purchases four new trucks on April 1, 2017. The terms of acquisition for each truck are described below.
1. Truck #1 has a list price of $42,150 and is acquired for a cash payment of $39,059.
2. Truck #2 has a list price of $44,960 and is acquired for a down payment of $5,620 cash and a zero-interest-bearing note with a face amount of $39,340. The note is due April 1, 2018. Pina 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 $44,960. It is acquired in exchange for a computer system that Pina carries in inventory. The computer system cost $33,720 and is normally sold by Pina for $42,712. Pina uses a perpetual inventory system.
4. Truck #4 has a list price of $39,340. It is acquired in exchange for 900 shares of common stock in Pina Corporation. The stock has a par value per share of $10 and a market price of $13 per share.