Reference no: EM132222716

Question - Novak 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 $22,350 and is acquired for a cash payment of $20,711.

2.Truck 2 has a list price of $23,840 and is acquired for a down payment of $2,980 cash and a zero-interest-bearing note with a face amount of $20,860. The note is due April 1, 2018. Novak 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 $23,840. It is acquired in exchange for a computer system that Novak carries in inventory. The computer system cost $17,880 and is normally sold by Novak for $22,648. Novak uses a perpetual inventory system.

4.Truck 4 has a list price of $20,860. It is acquired in exchange for 990 shares of common stock in Novak Corporation. The stock has a par value per share of $10 and a market price of $13 per share.

Prepare the appropriate journal entries for the above transactions for Novak Corporation.