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Ken Applegate owned equipment with an original cost of $30,000 with $20,000 of accumulated

Ken Applegate owned equipment with an original cost of $30,000 with $20,000 of accumulated amortization. The equipment was traded in on new equipment costing $50,000 with a trade-in allowance of $8,000 and the balance in cash. Determine the following.

a. The book value of the old machine was ________________.

b. The loss on the exchange was ________________.

c. The cost basis on the books for the new machine, assuming accounting rules, is ________________.

a. $10,000

b. $2,000

c. $50,000

21) The Cutcut Mower Service owned a truck with an original cost of $70,000 on which there is accumulated amortization of $60,000. The truck is exchanged for a new truck priced at $100,000 with a trade-in allowance of $16,000 and the balance in cash.

a. The book value of the old truck is ________________.

b. The gain on the exchange is ________________.

c. The cost basis in the new truck, assuming accounting rules is ________________.

22) Journalize the following transactions for PetsRUs:

Mar. 5Sold a truck for $6,000 that cost $9,000 and had an accumulated

amortization of $5,000.

 

Mar. 10A machine costing $10,000 with accumulated amortization of $8,000

was destroyed in a fire. No claim was filed.

 

May 15 Traded in a machine costing $20,000, with $15,000 of accumulated amortization, 

for a new machine costing $30,000 with a trade-in allowance of $7,000.

23) A computer server system, which had cost $210,000 and had accumulated amortization of $147,000, was traded for a new system with a fair market value of $235,000. The old system and cash of $180,000 were given for the new system. Prepare the journal entry for the exchange of these similar assets.

Dec 07 2019 View more View Less

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