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Georgia [21]
3 years ago
7

Navajo Corporation traded a used truck (cost $25,000, accumulated depreciation $22,500) for a small computer worth $4,125. Navaj

o also paid $625 in the transaction.
Prepare the journal entry to record the exchange, assuming the exchange lacks commercial substance.
Business
1 answer:
bulgar [2K]3 years ago
6 0

Answer:

Calculation of Gain or Loss:

Book Value of Truck:

= 25,000 - 22,500

= $2,500

Gain on Exchange:

= 4,125 - 2,500 - 625

= $1,000

Therefore, the journal entry is as follows:

Accumulated Depreciation A/c Dr. $22,500

computer A/c                              Dr. $3,125

                   To Truck                                            $25,000

                   To Cash                                              $625

(To record the Truck)

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