Brief Exercise 10-8 Sweet Corporation traded a used truck (cost $26,800, accumul

Question

Brief Exercise 10-8 Sweet Corporation traded a used truck (cost $26,800, accumulated depreciation $24,120) for a small computer with a fair value of $4,422. Sweet also paid $670 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

Explanation / Answer

Truck Book Value = Cost $26,800 - Accumulated Depreciation $24,120 = $2,680

Computer Market Value = $ 4,422

Cash Paid = $670

Gain on Sale of Asset = Computer Market Value $ 4,422 - Truck Book Value $ 2,680 - Cash Paid $ 670 = $ 1,072

Computer Purchase a/c                    Debit $ 4,422

Accumulated Depreciation-Truck a/c Debit $ 24,120

                        Truck Sold Account Credit $ 26,800

                        Cash Paid Account Credit $ 670

                       Gain on Sale of Asset Credit $ 1,072

(Being Small computer purchase in exchange of used truck with additional cash payment)

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