Instructions

Assuming the effect of borrowing cost capitalization is material, what is the total amount of borrowing cost to be capitalized?

E$10\mathrm{.}11($LO $3)($Entries for Equipment Acquisitions$)$ Song Engineering purchased conveyor equipment with a list price of $15,000.$ Presented below are three independent cases related to the equipment $($amounts in thousands$).$

a$.$ Song paid cash for the equipment $8$ days after the purchase. The vendor's credit terms are $\frac{2}{10},\frac{n}{30}.$ Assume that equipment purchases are initially recorded gross.

b$.$ Song traded in equipment with a book value of #$2,000($initial cost #$8,000),$ and paid #$14,200$ in cash one month after the purchase. The old equipment could have been sold for #$400$ at the date of trade. $($The exchange has commercial substance.$)$

c$.$ Song gave the vendor a $16,200,$ zero$-$interest$-$bearing note for the equipment on the date of purchase. The note was due in $1$ year and was paid on time. Assume that the effective$-$interest rate in the market was $9\%.$

Instructions

Prepare the general journal entries required to record the acquisition and payment in each of the independent cases above. $($Round to the nearest won.$)$