On October 1, Bentley Delivery Services acquired a new truck with a list price (

Question

On October 1, Bentley Delivery Services acquired a new truck with a list price (fair market value) of $139,000. Bentley Delivery received a trade-in allowance (fair market value) of $21,800 on an old truck of similar type and paid cash of $117,200. The following information about the old truck is obtained from the account in the equipment ledger: cost, $96,000; accumulated depreciation on December 31, the end of the preceding fiscal year, $64,000; annual depreciation, $16,000. Assume the exchange has commercial substance. a. Journalize the entry to record the current depreciation of the old truck to the date of trade-in. Depreciation Expense-Trucks 12,000 Accumulated Depreciation-Trucks 12,000 Feedbadk Check My Work Remember that the amount given for the depreciation on the fixed asset is the annual amount. b. Journalize the entry to record the transaction on July 1. If an amount box does not require an entry, leave it blank. Accumulated Deprecation Truds 76000 76,000 New Truck 139,000 Old Truck 96,000V Cash 117.200 v Gain on Exchange of Trucks

Explanation / Answer

b.

General Journal Debit Credit Accumulated Depreciation-Trucks $76,000 New truck $139,000 Old truck $96,000 Cash $117,200 Gain on Exchange of trucks $1,800

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