Homework #6- omework #6 st. Length: 2:00:00 Rober Question 11 (6 points) On July

Question

Homework #6- omework #6 st. Length: 2:00:00 Rober Question 11 (6 points) On July 1, 2016, Alpha Company exchanged an old computer (Equipment) with a historical cost of $1,500 that had accumulated depreciation of $800 after all June adjusting entries had been processed. The exchange was for a new computer having a fair value of $900. The transaction has commercial substance. Using this information, how much should be recorded on July 1 for the following accounts: 1. Accumulated Depreciation, Equipment 2. Gain or (Loss) on Sale (Enter any loss amount with $ sign inside of brackets) 3. Equipment- New 10 11 12 O Type here to search

Explanation / Answer

Journal entry for the given exchange is shown as follows:-

1) Accumulated depreciation will be debited for $800, Equipment account will be credited with amount $1,500.

2) Gain on sale will be $200. (i.e. balancing figure)

3) Equipment - New will be recorded at its fair value (i.e. $900).

Date General Journal Debit Credit July 1, 2016 Equipment-New 900 Accumulated Depreciation 800 Gain on sale (Bal fig.) (900+800-1,500) 200 Equipment 1,500

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