Sunland Inc. has negotiated the purchase of a new piece of automatic equipment at a price of $10,080 plus trade-in, f.o.b.factory.Sunland Inc. paid $10,080 cash and traded in used equipment. The used equipment had originally cost $78,120; it had a book value of$52,920 and a secondhand fair value of $60,228, as indicated by recent transactions involving similar equipment. Freight andinstallation charges for the new equipment required a cash payment of $1,386.(a)Prepare the general journal entry to record this transaction, assuming that the exchange has commercial substance. (Creditaccount titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for theaccount titles and enter O for the amounts. List all debit entries before credit entries.)Account Titles and ExplanationDebitCredit

Step 1: Determine the Total Cost of the New EquipmentThe cost of the new equipment as per the…

Answered: Sunland Inc. has negotiated the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Grouper Inc. has negotiated the purchase of a new piece of automatic equipment at a price of $10,080 plus trade-in, f.o.b. factory. Grouper Inc. paid $10,080 cash and traded in used equipment. The used equipment had originally cost $78,120; it had a book value of $52,920 and a secondhand fair value of $60,228, as indicated by recent transactions involving similar equipment. Freight and installation charges for the new equipment required a cash payment of $1,386. Assuming the same facts as in (a) except that fair value information for the assets exchanged is not determinable, prepare the general journal entry to record this transaction. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Ashbrook Inc. has negotiated the purchase of a new piece of automatic equipment at a price of $8,000 plus trade-in, f.o.b. factory. Ashbrook Inc. paid $8,000 cash and traded in used equipment. The used equipment had originally cost $62,000; it had a book value of $42,000 and a secondhand fair value of $47,800, as indicated by recent transactions involving similar equipment. Freight and installation charges for the new equipment required a cash payment of $1,100. Instructions a. Prepare the general journal entry to record this transaction, assuming that the exchange has commercial substance. b. Assuming the same facts as in (a) except that fair value information for the assets exchanged is not determinable, prepare the general journal entry to record this transaction.
Larkspur Ltd. traded a used truck (cost $30,200, accumulated depreciation $27,180, fair value $1,950) for a new truck. Larkspur did look up the value of its used truck and determined its fair value at the date of the trade is $1,950. The list price of the new truck is $35,700 and the trade-in allowance given on the trade was $4,970. If Larkspur paid $30,730, what should be the amount used as the cost of the new truck? The cost of the new truck $ Prepare Larkspur's entry to record the 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. List all debit entries before credit entries.) Account Titles and Explanation Debit Credit NOO
Grouper Inc. has negotiated the purchase of a new piece of automatic equipment at a price of $10,080 plus trade-in, f.o.b. factory. Grouper Inc. paid $10,080 cash and traded in used equipment. The used equipment had originally cost $78,120; it had a book value of $52,920 and a secondhand fair value of $60,228, as indicated by recent transactions involving similar equipment. Freight and installation charges for the new equipment required a cash payment of $1,386. Prepare the general journal entry to record this transaction, assuming that the exchange has commercial substance. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit
Maxim Company exchanged a used machine with a book value of $26,000 (cost $54,000 less $28,000 accumulated depreciation) and cash of $8,000 for a delivery truck. The machine has a estimated fair market of $36,000. The transaction has commercial substance. Regarding the journal entry to record the exchange, what value will be assigned to the delivery truck? O 36,000 O 44,000 O 54,000 O 34,000 Question 17 The cost of training employees to operate newly acquired machinery are usually capitalized as part of the acquisition value of the asset. O True
Champion Industries exchanged a dust-scrubbing piece of equipment for another version of the same type of equipment and received $12,000 cash. The old dust scrubber cost $76,200 and had a net book value of $44,000. The new dust scrubber had a fair market value of $60,000. Prepare the journal entry to record the exchange, assuming that the exchange a) has commercial substance, and b) lacks commercial substance.
Windsor Ltd. traded a used truck (cost $31,100, accumulated depreciation $27,990, fair value $1,720) for a new truck. Windsor did look up the value of its used truck and determined its fair value at the date of the trade is $1,720. The list price of the new truck is $36,530 and the trade-in allowance given on the trade was $4,830. If Windsor paid $31,700, what should be the amount used as the cost of the new truck? The cost of the new truck Prepare Windsor's entry to record the 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. List all debit entries before credit entries.) Account Titles and Explanation Vehicles Accumulated Depreciation - Vehicles Loss on Disposal of Vehicles Vehicles 33420 Cash Debit 33420 27990 1390 Credit 31100 31700
In October, Dean Company exchanged an old packing machine costing P240,000 and 50% depreciated, for a dissimilar used machine and paid a cash difference of P32,000. The market value of the old packaging machine was determined to be P140,000. How much is the cost of the newly acquired machine and the amount of gain or loss, respectively, that Dean should record on this exchange?
Willis Company trades in a printing press for a newer model. The cost of the old printing press was $62,000, and accumulated depreciation up to the date of the trade - in is $46,000. The company also pays $45,000 cash for the newer printing press. The fair market value of the newer printing press is $70,000. The journal entry to acquire the new printing press will required a debit to Printing Press for: A. $45,000 B. $108,000. C. $70,000. D. $62,000
Bella company entered into an exchange agreement of exchanging its equipment for two pickup vehicles. The equipment has original cost- of $32,000 and accumulated depreciation of $7,000. The fair value of equipment was $22,000 and Bella also paid cash of $7,200 for the exchange. At what amount will pick up vehicles be recorded assuming that the exchange has commercial substance. $25,000 $32,200 $22,000 $29.200
A company acquires $45,000 in new web servers. In exchange, the company trades in old web servers along with a cash payment. The old servers originally cost $30,000 and had accumulated depreciation of $23,400 at the time of the trade. Prepare entries to record the trade under two different assumptions where (a) the exchange has commercial substance and the old servers have a trade-in allowance of $3,000 and (b) the exchange has commercial substance and the old servers have a trade-in allowance of $7,000.
Cheng Company traded a used truck for a new truck. The used truck cost $30,000 and has accumulated depreciation of $27,000. The new truck is worth $37,000. Cheng also made a cash payment of $36,000. Prepare Cheng’s entry to record the exchange. (The exchange lacks commercial substance.)

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS