Question

16 Caleb Co. owns a machine that had cost $47.200 with accumulated depreciation of $20,800. Caleb exchanges the machine for a newer model that has a market value of $56,000. 1. Record the exchange assuming Caleb paid $32.400 cash and the exchange has commercial substance. 2. Record the exchange assuming Caleb paid $24,400 cash and the exchange has commercial substance Skipped View transaction list Journal entry worksheet Record the exchange assuming Caleb paid $32,400 cash and the exchange has commercial substance. Note: Enter debits before credits Transaction General Journal Debit Credit Record entry Clear entry View general journal

Answer 1

Transaction	General Journal	Debit	Credit
1	Machine (new)	$   56,000
	Accumulated Depreciation - Old	$   20,800
	Loss on exchange of asset	$     2,800
	Machine (old)		$   47,200
	Cash		$   32,400
Transaction	General Journal	Debit	Credit
2	Machine (new)	$   56,000
	Accumulated Depreciation - Old	$   20,800
	Gain on exchange of asset		$     5,200
	Machine (old)		$   47,200
	Cash		$   24,400
	Workings:	Case 1	Case 2
	Machine (new)	$   56,000	$   56,000
Add:	Accumulated Depreciation - Old	$   20,800	$   20,800
Less:	Machine (old)	$ -47,200	$ -47,200
Less:	Cash	$ -32,400	$ -24,400
	Gain / (Loss) on exchange of asset	$   -2,800	$     5,200