Question

Jaxin's Delivery Company and Felicity's Express Delivery exchanged delivery trucks on January 1, 2012. Jaxin's truck...

Jaxin's Delivery Company and Felicity's Express Delivery exchanged delivery trucks on January 1, 2012. Jaxin's truck cost $22,000. It has accumulated depreciation of $15,000 and a fair value of $4,000. Felicity's truck cost $10,000. It has accumulated depreciation of $8,000 and a fair value of $4,000. The transaction has commercial substance.

A) Journalize the exchange for Jaxin's Delivery Company.

B) Journalize the exchange for Felicity's Express Delivery.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

A)

Account Titles and Explanation Debit Credit
New truck 4000
Accumulated depreciation 15000
Loss on exchange 3000
Old truck 22000
(To record Truck exchanged on loss)

Book value of old truck = Cost of truck - Accumulated depreciation

$22,000 - $15,000 = $7,000

Loss on exchange = Book value of truck - Fair value of truck

$7,000 - $4,000 = $3,000

B)

Account Titles and Explanation Debit Credit
New truck 4000
Accumulated depreciation 8000
Old truck 10000
Gain on exchange 2000
(To record Truck exchanged on gain)

Book value of old truck = Cost of truck - Accumulated depreciation

= 10000 - 8000 = 2000

Gain on exchange =   Fair value of truck - Book value of truck

= 4000 - 2000 = 2000

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
TOC company exchanged no. of used trucks plus cash for a semi-truck. The used trucks have...
TOC company exchanged no. of used trucks plus cash for a semi-truck. The used trucks have a combined book value of $42,000 (Cost=64,000 less Acc.dep= 22,000). The used trucks have a fair value of $49,000. TOC company will also pay extra $11,000 cash for the semi-truck. Calculate cost of semi-truck and record journal entries.
1. On January 2, 2020, Collins Company purchased a delivery truck for $45,000 cash. The truck...
1. On January 2, 2020, Collins Company purchased a delivery truck for $45,000 cash. The truck had an estimated useful life of seven years and an estimated residual value of $3,000. Straight-line depreciation was used. Assuming the transactions have commercial substance, prepare the journal entries to record the disposition of the truck on September 1, 2019, under each of the following assumptions: (a) The truck and $55,000 cash were exchanged for equipment that had a fair value of $70,000. (b)...
Flat Tire Inc. exchanged equipment for three pickup trucks. The book value and fair value of...
Flat Tire Inc. exchanged equipment for three pickup trucks. The book value and fair value of the equipment given up were $40,000 (original cost of $75,000 less accumulated depreciation of $35,000) and $43,000, respectively. 1. Assume that Flat Tire Inc. paid $15,000 in cash and the exchange has commercial substance, at what amount will Flat Tire, Inc. value the pickup trucks? a. $67,000 b.. $75,000 c. $58,000 d. $43,000 2. Assume that Flat Tire Inc. paid $15,000 in cash and...
On January 2, 2020, Collins Company purchased a delivery truck for $45,000 cash. The truck had...
On January 2, 2020, Collins Company purchased a delivery truck for $45,000 cash. The truck had an estimated useful life of seven years and an estimated residual value of $3,000. Straight-line depreciation was used. Assuming the transactions have commercial substance, prepare the journal entries to record the disposition of the truck on September 1, 2019, under each of the following assumptions: (a) The truck and $55,000 cash were exchanged for equipment that had a fair value of $70,000. (b) The...
Santana Company exchanged equipment used in its manufacturing operations plus $2,000 in cash for similar equipment...
Santana Company exchanged equipment used in its manufacturing operations plus $2,000 in cash for similar equipment used in the operations of Delaware Company. The following information pertains to the exchange. Santana Co. Delaware Co. Equipment (cost) $28,000 $18,000 Accumulated depreciation 19,000 10,000 Fair value of equipment 13,000 15,000 Cash given up   2,000 Prepare the journal entries to record the exchange on the book of Delaware Co.  Assume that the exchange lacks commercial substance. Prepare the journal entries to record the exchange...
1 On January 1, 2017, Aylmer Inc purchased a truck for $100,000. The truck has an...
1 On January 1, 2017, Aylmer Inc purchased a truck for $100,000. The truck has an estimated useful life of 4 years, and a residual value of $10,000. REQUIRED: a. Calculate deprecaition, by year using the double-declining-balance method. b. If at the end of 2019, Aylmer traded the truck for another truck. Aylmer paid cash of $4,500 and the fair value of the truck was $15,000. What is the journal entry if the transaction has commercial substance?
Iverson Company purchased a delivery truck for $45,000 on January 1, 2020. The truck was assigned...
Iverson Company purchased a delivery truck for $45,000 on January 1, 2020. The truck was assigned an estimated useful life of 100,000 miles and has a residual value of $10,000. The truck was driven 18,000 miles in 2020 and 22,000 miles in 2021. Compute depreciation expense using the units-of-activity method for the years 2020 and 2021. Depreciation expense for 2020 $ Depreciation expense for 2021 $
Here are current-year data regarding Sparrow Company’s delivery trucks: January 1 December 31 Delivery trucks $180,000...
Here are current-year data regarding Sparrow Company’s delivery trucks: January 1 December 31 Delivery trucks $180,000 $163,000 Accumulated depreciation (33,000) (31,000) Net book value $147,000 $132,000 During the current year, Sparrow acquired a new truck at a cost of $37,000, reported $18,000 of depreciation expense related to all its trucks, and reported a $19,000 gain on the sale of an old truck. How much cash did Sparrow receive from the sale of the old truck? _____________
China Inn and Midwest Chicken exchanged assets. Midwest Chicken received equipment and gave a delivery truck....
China Inn and Midwest Chicken exchanged assets. Midwest Chicken received equipment and gave a delivery truck. The fair value and book value of the delivery truck given were $24,000 and $27,000 (original cost of $32,000 less accumulated depreciation of $5,000), respectively. To equalize market values of the exchanged assets, Midwest Chicken received $7,500 in cash from China Inn. 1. At what amount did Midwest Chicken record the equipment?       2. How much gain or loss did Midwest Chicken recognize...
On September 3, 2021, the Robers Company exchanged equipment with Phifer Corporation. The facts of the...
On September 3, 2021, the Robers Company exchanged equipment with Phifer Corporation. The facts of the exchange are as follows: Robers’ Asset Phifer’s Asset Original cost $ 170,000 $ 190,000 Accumulated depreciation 95,000 103,000 Fair value 90,000 75,000 To equalize the exchange, Phifer paid Robers $15,000 in cash. What I need solved: Please help me record the exchange for both Robers and Phifer. The exchange has commercial substance for both companies. (If no entry is required for a transaction/event, select...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT