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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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