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Equipment costing $118,000 has accumulated depreciation of $92,000. The equipmen

ID: 2455950 • Letter: E

Question

Equipment costing $118,000 has accumulated depreciation of $92,000. The equipment is a trade - in for new equipment costing $187,000. If the trade - in value received for the old equipment is $30,000, the journal entry to record this transaction is to: debit Equipment (New) for $187,000, and credit Cash for $187,000. debit Equipment (New) for $187,000, debit Accumulated Depreciation - Equipment for $92,000, debit Loss on Exchange of Assets for $26,000, credit Equipment (Old) for $118,000 and credit Cash for $187,000. debit Equipment (New) for $187,000, debit Accumulated Depreciation - Equipment for $92,000, credit Equipment (Old) for $118,000, credit Cash for $157,000, and credit Gain on Exchange of Assets for $4,000. debit Equipment (New) for $187,000, debit Accumulated Depreciation - Equipment for $92,000, credit Equipment (Old) for $118,000 and credit Cash for $161,000.

Explanation / Answer

The correct option is 'c'.

New equipment. 187000

Accumulated depreciation 92000

Old equipment. 118000

Gain on exchange of asset. 4000

Cash. (187000-30000) 157000