Cheng Company traded a used truck for a new truck. The used truck cost $30,000 a

Question

Cheng Company traded a used truck for a new truck. The used truck cost $30,000 and has accumulated depreciation of $27,000. The new truck is worth $37,000. Cheng also made a cash payment of $36,000.

Prepare Cheng’s entry to record the exchange. (The exchange lacks commercial substance.) (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 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

Account Titles and Explanation

Debit

Credit

    Trucks (used)    Cash    Trucks (new)    Accumulated Depreciation-Trucks    Loss on Disposal of Trucks    

    Loss on Disposal of Trucks    Trucks (used)    Cash    Trucks (new)    Accumulated Depreciation-Trucks    

    Accumulated Depreciation-Trucks    Loss on Disposal of Trucks    Trucks (used)    Cash    Trucks (new)    

    Cash    Loss on Disposal of Trucks    Accumulated Depreciation-Trucks    Trucks (used)    Trucks (new)    

    Trucks (used)    Cash    Trucks (new)    Accumulated Depreciation-Trucks    Loss on Disposal of Trucks    

Explanation / Answer

Account titles and explanation Debit Credit Truck $37,000 Accumulated depreciation $27,000 Loss on disposal of truck $2,000 Cash $36,000 Truck $30,000

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