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The journal entry to record the exchange would be

Fritz Inc. decides to trade a machine that originally cost $20,000 and has accumulated depreciation of $15,000. the new machine will have an invoice price of $12,500; the company pays cash in the amount of $6,000. The journal entry to record the exchange would be:

a. (dr )Machinery $12,500


     (dr) Accum. Depreciation, Machinery $15,000


     (cr) Cash $6,000


     (cr) Gain on Exchange of Machinery $1,500

b. (cr) Machinery $20,000


     (dr) Machinery $13,500


     (dr) Accum. Depr., Machinery $15,000


     (cr) Cash $6,000

c. (cr)Gain on Sale of Machinery $2,500


    (cr)Machinery $20,000


    (dr)Machinery $11,000


    (dr)Accum. Depr., Machinery $15,000


    (cr)Cash $6,000


    (cr)Machinery $20,000

d. none of the above would be the correct entry.

May 03 2018 View more View Less

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