Question 1:

Kadlac Labs Co puchased an electric wax melter on
6/30/87 by trading in their old gas model and paying
the balance in cash. The following data relateto the
purchase:
List price of new melter $16,000.00

Cash Paid 9,700

Cost of old melter (five year life, $700.00 residual
value) 11,200

Accumulated depreciation - old melter (straight-line)
6,300

Second hand melter value of old melter 5,500

Prepare the journal entry(ies) necessary to record
this exchange, assuming that the melters exchanged are
(1) similar in nature; (2) dissimilar in nature.
Kadlac's fiscal year ends on 12/31 and depreciation
has been recorded through 12/31/86



Question 2
On Oct 1, McCabe's, a local entertainment
establishment, acquired a new piano that had a list
price of 3,800
McCabe's received a trade in allowance of 1,360 on
it's old piano, which had a book value of 800.00
(original cost 1,800). The fair market value of the
old piano was 650.00
The remainder owed by McCabe's was paid in cash.

(a)Prepare the journal entries to record this
transaction.
(b)What significance does the list price have for this
computation?