Exercise 10-18 Flounder Company purchased an electric wax melter on April 30, 20

Question

Exercise 10-18 Flounder Company purchased an electric wax melter on April 30, 2017, by trading in its old gas model and paying the balance in cash. The following data relate to the purchase.

Flounder Company purchased an electric wax melter on April 30, 2017 by trading in its old gas model and paying the balance in cash. The following data relate to the purchase. List price of new melter Cash paid Cost of old melter (5-year life, $756 salvage value) Accumulated Depreciation ald melter (straight line) Secondhand fair value of old melter $17,064 10,800 12,096 6,804 5,616 Prepare the journal entries necessary to record this exchange, assuming that the axchange (a) has commercial substance, and (b) lacks commercial substance. Flounder's fiscal year ends on December 31, and depreciation has been recorded through December 31, 2016. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter o for the amounts.) Debit Credit No. Account Titles and Explanation a) Exchange has commercial substance: Depreciation Typente T Accumulated Deprecian wpment (To record current depreciation.) Accumulated Depreciation Equipment Equipment T Gain on Diaposs of upment 16416 JT1080 LUN EE T euipment (To record exchange of the equipment.) b) Exchange lacks commercial substance: IT Accumulated Dupristupmunt (To record current depreciation.) 76 ?. ???? ???? ?.???????uis Trarik Tequipment ???? | T Equipment T in on Dispose of upment

Explanation / Answer

General Journal Debit Credit Accumulated Depreciation-Equipment 7560 Equipment 16416 Cash 10800 Equipment 12096 Gain on disposalof equipment 1080

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