Answer:
The journal entry:
Debit Accumulated depreciation $160,000
Debit Equipment $200,000
Credit Cash $170,000
Credit Equipment $180,000
Credit Gain on exchange asset $10,000
Explanation:
The old equipment had a book value of $20,000 at the time of exchange. The company paid $170,000 cash and a trade-in of old equipment.
The new equipment costs of $200,000.
Carothers Corporation will record gain on exchange by the journal entry:
Debit Accumulated depreciation $160,000
Debit Equipment $200,000
Credit Cash $170,000
Credit Equipment $180,000
Credit Gain on exchange asset $10,000
