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| Truck #2 has a list price of $56,480 and is acquired for a down payment of $7,060 cash and a zero-interest-bearing note with a face amount of $49,420. The note is due April 1, 2018. Grouper would normally have to pay interest at a rate of 9% for such a borrowing, and the dealership has an incremental borrowing rate of 8%. |
Expert Answer
| General Journal | Debit | Credit |
| Truck #2 | $52,399.45* | |
| Discount on Notes Payable | $4,080.55 | |
| Cash | $7,060 | |
| Notes Payable | $49,420 |
*$49,420 x 9% for one year, $49,420 x .91743 = $45,339.45 + $7,060 = $52,399.45
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