Accounting for a trade of similar asset
Hi I'm Sylvia.
I have worked my trade- In entries as follows
Debit Credit
Depreciation expense 320
Accumulated depreciation-Truck 320
Truck (new) 21780
Accumulated depreciation-Truck 16420
Truck (Old) 18000
Cash 20,200
The original problem was as follows: exchanged a truck that cost $18000, new truck costs $23000. Old truck had been depreciated through November of last year and the transaction took place on December of same year. Depreciation at a rate of $320 per month with a total through November of $16100. Received a trade-in allowance of $2800 on old truck. I paid the balance with a check and updated depreciation through December. I am stuck on the last transaction, which requires me to use three lines in the cash payments journal to to record the purchase?
Do I debit amount of new truck and credit cash? Then debit accumulated depreciation and credit cash? And last put the cost of the old truck in the general column in parenthesis to indicate the credit of the old truck and then credit cash? Please help I have gotten this far and have just confused myself.
:confused: