Question

Cedric Company recently traded in an older model computer for a new model. The old model’s book value was $288,000 (original cost of $628,000 less $340,000 in accumulated depreciation) and its fair value was $320,000. Cedric paid $72,000 to complete the exchange which has commercial substance.

Required:
Prepare the journal entry to record the exchange. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

• Record the exchange of assets.

Note: Enter debits before credits.

	Event General Journal Debit Credit 1

Answer 1

Solution:

Explanation:

Equipment - new($320000+$72000) =$392000

Profit ($320000 -$288000) =$32000

Journal entry:

Event	General journal	Debit	Credit
1.	Equipment - new	$392,000
	Accumulated depreciation	$340,000
	Profit		$32,000
	Cash		$72,000

Event 1	Equipment - old		$628,,000
	Total	$732,000	$732000

Sorry for cell disturbance, there is a whole journal entry.