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Question: Mooney's Inc. owns a second trailer that costs $30,000. They want to trade the trailer in for a newer model. The new trailer costs $28,000 but the dealer will give Mooney a $2,000 trade- in allowance on the old trailer. Accumulated depreciation on the old trailer totals $27,000 at the time of the trade-in. Required: 1. What is the amount of gain or loss on the trade-in of the old trailer? a) b) Loss Gain c) Gain d) Loss of $8,000 of of of $1,000 $1,000 $2,000 2. Using the information from Question 1, produce the journal entry to record the transaction, assuming that Mooney paid cash for the new trailer.

Question: Mooney's Inc. owns a second trailer that costs $30,000. They want to trade the trailer in for a newer model. The new trailer costs $28,000 but the dealer will give Mooney a $2,000 trade- in allowance on the old trailer. Accumulated depreciation on the old trailer totals $27,000 at the time of the trade-in. Required: 1. What is the amount of gain or loss on the trade-in of the old trailer? a) b) Loss Gain c) Gain d) Loss of $8,000 of of of $1,000 $1,000 $2,000 2. Using the information from Question 1, produce the journal entry to record the transaction, assuming that Mooney paid cash for the new trailer.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question: Mooney's Inc. owns a second trailer that costs $30,000. They want to trade the trailer in for a newer model. The new trailer costs $28,000 but the dealer will give Mooney a $2,000 trade- in allowance on the old trailer. Accumulated depreciation on the old trailer totals $27,000 at the time of the trade-in. Required: 1. What is the amount of gain or loss on the trade-in of the old trailer? a) b) Loss Gain c) Gain d) Loss of $8,000 of of of $1,000 $1,000 $2,000 2. Using the information from Question 1, produce the journal entry to record the transaction, assuming that Mooney paid cash for the new trailer.
Transcribed Image Text:Question: Mooney's Inc. owns a second trailer that costs $30,000. They want to trade the trailer in for a newer model. The new trailer costs $28,000 but the dealer will give Mooney a $2,000 trade- in allowance on the old trailer. Accumulated depreciation on the old trailer totals $27,000 at the time of the trade-in. Required: 1. What is the amount of gain or loss on the trade-in of the old trailer? a) b) Loss Gain c) Gain d) Loss of $8,000 of of of $1,000 $1,000 $2,000 2. Using the information from Question 1, produce the journal entry to record the transaction, assuming that Mooney paid cash for the new trailer.
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