Q1) Geddes Engineering Corporation bought conveyor equipment with list price of $10,000. Given below are three independent cases related to the equipment.
(a) Geddes paid cash for equipment 8 days after purchase. Vendor's credit terms are 2/10, n/30. Suppose that equipment purchases are recorded gross.
(b) Geddes traded in equipment with the book value of $2,000 (initial cost $8,000), and paid $9,500 in cash one month after purchase. Old equipment could have been sold for $400 at date of trade. (Exchange has commercial substance.)
(c) Geddes gave vendor a $10,800 zero-interest-bearing note for equipment on date of purchase. Note was due in one year and was paid on time. Suppose that effective interest rate in market was 9%.
Create general journal entries required to record acquisition and payment on each of independent cases above.