Janus Coat Company purchased a delivery truck on June 1 for $30,000, paying $10,000 cash and signing a 6%, 2-month note for the remaining balance. The truck is expected to depreciate $6,000 each year. Janus Coat Company prepares monthly financial statements. Prepare the general journal entry to record the acquisition of the delivery truck on June 1st. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Question

Brook

Business

28 April, 09:36

Janus Coat Company purchased a delivery truck on June 1 for $30,000, paying $10,000 cash and signing a 6%, 2-month note for the remaining balance. The truck is expected to depreciate $6,000 each year. Janus Coat Company prepares monthly financial statements. Prepare the general journal entry to record the acquisition of the delivery truck on June 1st. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

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Flynn · Answer 1

Dr delivery truck $30,000

Cr cash $10,000

Cr notes payable $20,000

Explanation:

The acquisition of the truck was consummated partly in cash of $10,000 and notes payable was signed for the remainder of $20,000, hence the appropriate would be to debit delivery truck account with the total cost of $30,000 while the cash account and notes payable are credited with $10,000 and $20,000 respectively.

The interest would be due and recognized later on, not when the truck is freshly acquired.