Question

Cheyenne Company purchased an electric wax melter on April 30, 2017, by trading in its old gas model and paying the balance in cash. The following data relate to the purchase. List price of new melter $16,748 Cash paid 10,600 Cost of old melter (5-year life, $742 salvage value) 11,872 Accumulated Depreciation-old melter (straight-line) 6,678 Secondhand fair value of old melter 5,512 Prepare the journal entries necessary to record this exchange, assuming that the exchange (a) has commercial substance, and (b) lacks commercial substance. Cheyenne’s fiscal year ends on December 31, and depreciation has been recorded through December 31, 2016. (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.)

Answer 1