Dodson Company traded in a manual pressing machine for an automated pressing mac

Question

Dodson Company traded in a manual pressing machine for an automated pressing machine and gave $8,000 cash. The old machine cost $93,000 and had a net book value of $71,000. The old machine had a fair market value of $60,000. Which of the following is the correct journal entry to record the exchange?

a. Equipment 68,000
Loss on Exchange 11,000
Accumulated Depreciation 22,000

Equipment 93,000
Cash 8,000

b. Equipment 68,000

Equipment 60,000
Cash 8,000

c. Cash 8,000
Equipment 60,000
Loss on Exchange 11,000
Accumulated Depreciation 22,000

Equipment 101,000

d. Equipment 123,000

Accumulated Depreciation 22,000
Equipment 93,000
Cash 8,000

Explanation / Answer

Dodson Company traded in a manual pressing machine for an automated pressing machine and gave $8,000 cash. The old machine cost $93,000 and had a net book value of $71,000. The old machine had a fair market value of $60,000. Which of the following is the correct journal entry to record the exchange? a. Equipment 68,000 Loss on Exchange 11,000 Accumulated Depreciation 22,000 Equipment 93,000 Cash 8,000

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