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Crystal Clear · Jun 18, 2009, 10:10 AM

Riverstone Farm traded an old combine for a new combine on August 16. The old combine had an original cost of $95,000 and accumalated depreciation on the date of exchange of $69,000. How would I do an entries to record the disposition of the old combine and the acquisition of the new combine under these assumptions:

(a) list price of new $120,000; Trade in allowance on old, $30,000; Balance paid cash

(b) List price of new, $120,000; Trade in allowance on old, $20,000; Balance paid in cash

ArcSine · Jun 18, 2009, 11:07 AM

Under both assumptions, part of your JE will be to erase the old unit from the books. Credit the asset account, and debit accumulated, for 95K and 69K, respectively.

Next, credit Cash for the balance paid in cash.

Finally, debit an asset account for the new machine. The correct amount will be the sum of the cash paid at the purchase, and the net book val of the old unit (95K - 69K).

I hope this helps a bit.

...it was early and I was full of no coffee...