Question

Oriole Ltd. purchased an electric wax melter on April 30, 2020, 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, $620 residual value) Accumulated depreciation on old melter (straight-line) Market value of old melter in active secondary market $15,600 10,600 12,620 7,200 5,900 Assuming that Oriole's fiscal year ends on December 31 and depreciation has been recorded through December 31, 2019, prepare the journal entries that are necessary to record this exchange. (Credit account titles are automatically indented when the 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.)

Answer 1

Asset is used upto apoil 30, 2020 Cost of the asset 12620 len residual vale = 12000 useful life years Depreciation for year - 2400 Depreciation upto her hour Monthy So Dec. 31. 2009 has passed. Depreciation amounts to 2400x4 = 800 Accumulated stion Balance = 7200 on 31-Dec-17. Now 800 800 a Total Market price of machine -old one - 5900 Cash paid for new one 10,600 with enchange of old one. 16 500 Depreciation accumulated 24,Soa len! Asset value of old melter (12,620) when purchased lex! Cash paid (10,600) 12.80 Scanned with CamScanner

Debit Credit goa Depreciation Eapense Accumulated Depreciation (Being Depreciation expense for four months from jan 2020 to April 2020. paned.) Cast of new melter $ 165oo Accumulated Depreciation $8,000 1280 Gain on sale cost of old melter Cash & 12 620 (Being equipment exchange recorded) cs Scanned with CamScanner