Question

Shamrock Corporation traded a used truck (cost $28,000, accumulated depreciation $25,200) for a small computer with a fair value of $4,620. Shamrock also paid $700 in the transaction.
Prepare the journal entry to record the exchange. (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_______________________ ______________ ________________

Answer 1

Explanation:

The journal entry to record the exchange who contains the commercial substance is shown below:

Computer A/c Dr $4,620

Accumulated depreciation - Truck Dr $25,200

           To Truck $28,000

           To Cash $700

           To Gain on sale of truck $1,120

(Being the exchange is recorded)

The gain or disposal on sale of truck is the remaining balance left so that the debit and credit balance get equaled