Brief Exercise 10-11 Pronghorn Company traded a used truck for a new truck. The

ID: 2552983 • Letter: B

Question

Brief Exercise 10-11 Pronghorn Company traded a used truck for a new truck. The used truck cost $50,100 and has accumulated depreciation of $45,090. The new truck is worth $61,790. Pronghorn also made a cash payment of $60,120. Prepare Pronghorn's entry to record the exchange. (The exchange lacks 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 Trucks (new) Loss on Disposal of Trucks Trucks (used) Cash Accumulated Depreciation-Trucks

Explanation / Answer

Answer

S No.

Debit

Credit

New Truck

61,790

Accumulated Depreciation (Old Truck)

45,090

Loss on Disposal of Truck

3,340

Old Truck

50,100

Cash

60,120

Loss on Disposal of Truck

Loss = (Value of New Truck + Accumulated Depreciation) - (Cost of Old Truck + Cash)

= (50,100 + 60,120) – (61,790 + 45,090)

Loss = 3,340