Question

Monty Company purchased equipment on January 2, 2013, for $ 105,700. The equipment had an estimated useful life of 5 years with an estimated salvage value of $ 13,200. Monty uses straight-line depreciation on all assets. On January 2, 2017, Monty exchanged this equipment plus $ 13,100 in cash for newer equipment. The old equipment has a fair value of $ 53,300.

Prepare the journal entry to record the exchange on the books of Monty Company. Assume that the exchange has commercial substance. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Dat	Account Titles and Explanation	Debit	Credit
Jan. 2 1. 2. 3. 4. 5. List of Accounts That could be used Accounts Payable Accumulated Depreciation-Building Accumulated Depreciation-Equipment Accumulated Depreciation-Machinery Accumulated Depreciation-Trucks Buildings Cash Common Stock Contribution Revenue Cost of Goods Sold Depreciation Expense Direct Labor Discount on Notes Payable Equipment Factory Overhead Gain on Disposal of Buildings Gain on Disposal of Equipment Gain on Disposal of Machinery Gain on Disposal of Trucks Insurance Expense Interest Expense Inventory Land Land Improvements Loss on Disposal of Buildings Loss on Disposal of Equipment Loss on Disposal of Machinery Loss on Disposal of Trucks Machinery Maintenance and Repairs Expense Materials Notes Payable Organization Expense Paid-in Capital in Excess of Par - Common Stock Prepaid Insurance Retained Earnings Salaries and Wages Expense Sales Revenue Trading Securities Trucks

Answer 1

Journal Entry
Date	Particulars	Dr. Amt.	Cr. Amt.
2-Jan-17	Equipment (New)	66,400.00		$13,100 + $53,300
	Accumulated Depreciation - Equipment	74,000.00		$18,500 X 4 Years
	Equipment (Old)		105,700.00
	Cash		13,100.00
	Gain on Disposal of Equipment		21,600.00
	(To record the disposal of eqipment)
Depreciation per annum = ($105,700 - $13,200) / 5 Years
Depreciation per annum = $18,500 per annum
WDV of Equipmnet as on Jan 1, 2017 = $105,700 - ($18,500 X 4 years)
WDV of Equipmnet as on Jan 1, 2017 = $31,700