Cedric Company recently traded in an older model computer for a
new model. The old model’s book value was $288,000 (original cost
of $628,000 less $340,000 in accumulated depreciation) and its fair
value was $320,000. Cedric paid $72,000 to complete the exchange
which has commercial substance.
Required:
Prepare the journal entry to record the exchange. (If no
entry is required for a transaction/event, select "No journal entry
required" in the first account field.)
Note: Enter debits before credits.
|
Solution:
Explanation:
Equipment - new($320000+$72000) =$392000
Profit ($320000 -$288000) =$32000
Journal entry:
Event | General journal | Debit | Credit |
1. | Equipment - new | $392,000 | |
Accumulated depreciation | $340,000 | ||
Profit | $32,000 | ||
Cash | $72,000 |
Event 1 |
Equipment - old | $628,,000 | |
Total | $732,000 | $732000 | |
Sorry for cell disturbance, there is a whole journal entry.
Cedric Company recently traded in an older model computer for a new model. The old model’s...
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