Sunland Inc. has negotiated the purchase of a new piece of automatic equipment at a price of $10,080 plus trade-in, f.o.b.factory.Sunland Inc. paid $10,080 cash and traded in used equipment. The used equipment had originally cost $78,120; it had a book value of$52,920 and a secondhand fair value of $60,228, as indicated by recent transactions involving similar equipment. Freight andinstallation charges for the new equipment required a cash payment of $1,386.(a)Prepare the general journal entry to record this transaction, assuming that the exchange has commercial substance. (Creditaccount titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for theaccount titles and enter O for the amounts. List all debit entries before credit entries.)Account Titles and ExplanationDebitCredit

Step 1: Determine the Total Cost of the New EquipmentThe cost of the new equipment as per the…

Answered: Sunland Inc. has negotiated the…

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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Grouper Inc. has negotiated the purchase of a new piece of automatic equipment at a price of $10,080 plus trade-in, f.o.b. factory. Grouper Inc. paid $10,080 cash and traded in used equipment. The used equipment had originally cost $78,120; it had a book value of $52,920 and a secondhand fair value of $60,228, as indicated by recent transactions involving similar equipment. Freight and installation charges for the new equipment required a cash payment of $1,386. Assuming the same facts as in (a) except that fair value information for the assets exchanged is not determinable, prepare the general journal entry to record this transaction. (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.)
Grouper Inc. has negotiated the purchase of a new piece of automatic equipment at a price of $10,080 plus trade-in, f.o.b. factory. Grouper Inc. paid $10,080 cash and traded in used equipment. The used equipment had originally cost $78,120; it had a book value of $52,920 and a secondhand fair value of $60,228, as indicated by recent transactions involving similar equipment. Freight and installation charges for the new equipment required a cash payment of $1,386. Prepare the general journal entry to record this transaction, assuming that the exchange has commercial substance. (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.) Account Titles and Explanation Debit Credit
Larkspur Ltd. traded a used truck (cost $30,200, accumulated depreciation $27,180, fair value $1,950) for a new truck. Larkspur did look up the value of its used truck and determined its fair value at the date of the trade is $1,950. The list price of the new truck is $35,700 and the trade-in allowance given on the trade was $4,970. If Larkspur paid $30,730, what should be the amount used as the cost of the new truck? The cost of the new truck $ Prepare Larkspur's entry to record the exchange. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Account Titles and Explanation Debit Credit NOO
Champion Industries exchanged a dust-scrubbing piece of equipment for another version of the same type of equipment and received $12,000 cash. The old dust scrubber cost $76,200 and had a net book value of $44,000. The new dust scrubber had a fair market value of $60,000. Prepare the journal entry to record the exchange, assuming that the exchange a) has commercial substance, and b) lacks commercial substance.
Maxim Company exchanged a used machine with a book value of $26,000 (cost $54,000 less $28,000 accumulated depreciation) and cash of $8,000 for a delivery truck. The machine has a estimated fair market of $36,000. The transaction has commercial substance. Regarding the journal entry to record the exchange, what value will be assigned to the delivery truck? O 36,000 O 44,000 O 54,000 O 34,000 Question 17 The cost of training employees to operate newly acquired machinery are usually capitalized as part of the acquisition value of the asset. O True
Parr Company traded in a used delivery truck with a carrying amount of P54,000 for a new delivery truck having a list price of P160,000 and paid a cash difference to the dealer of P75,000. The used truck has a fair value of P60,000 on the date of the exchange. At what amount should the new truck be recorded on Parr's books? P135,000 P129,000 P160,000 P106,000
Windsor Ltd. traded a used truck (cost $31,100, accumulated depreciation $27,990, fair value $1,720) for a new truck. Windsor did look up the value of its used truck and determined its fair value at the date of the trade is $1,720. The list price of the new truck is $36,530 and the trade-in allowance given on the trade was $4,830. If Windsor paid $31,700, what should be the amount used as the cost of the new truck? The cost of the new truck Prepare Windsor's entry to record the exchange. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter O for the amounts. List all debit entries before credit entries.) Account Titles and Explanation Vehicles Accumulated Depreciation - Vehicles Loss on Disposal of Vehicles Vehicles 33420 Cash Debit 33420 27990 1390 Credit 31100 31700
Willis Company trades in a printing press for a newer model. The cost of the old printing press was $62,000, and accumulated depreciation up to the date of the trade - in is $46,000. The company also pays $45,000 cash for the newer printing press. The fair market value of the newer printing press is $70,000. The journal entry to acquire the new printing press will required a debit to Printing Press for: A. $45,000 B. $108,000. C. $70,000. D. $62,000
In October, Dean Company exchanged an old packing machine costing P240,000 and 50% depreciated, for a dissimilar used machine and paid a cash difference of P32,000. The market value of the old packaging machine was determined to be P140,000. How much is the cost of the newly acquired machine and the amount of gain or loss, respectively, that Dean should record on this exchange?
Bella company entered into an exchange agreement of exchanging its equipment for two pickup vehicles. The equipment has original cost- of $32,000 and accumulated depreciation of $7,000. The fair value of equipment was $22,000 and Bella also paid cash of $7,200 for the exchange. At what amount will pick up vehicles be recorded assuming that the exchange has commercial substance. $25,000 $32,200 $22,000 $29.200
Cheng Company traded a used truck for a new truck. The used truck cost $30,000 and has accumulated depreciation of $27,000. The new truck is worth $37,000. Cheng also made a cash payment of $36,000. Prepare Cheng’s entry to record the exchange. (The exchange lacks commercial substance.)
During the current year, Ayayai Construction Ltd. traded an old crane that had a book value of $127,800 (original cost $198,800 less accumulated depreciation $71,000) for a new crane from Pina Manufacturing Inc. The new crane cost Pina $234,300 to manufacture and is classified as inventory. The following information is also available. Fair value of old crane Fair value of new crane Cash paid Cash received Ayayai Const. 1. 2. $116,440 No. Account Titles and Explanation Ayayai Construction Ltd. 167,560 Assuming that this exchange is considered to have commercial substance, prepare the journal entries on the books of (1) Ayayai Construction and (2) Pina Manufacturing. (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 O for the amounts. List all debit entries before credit entries.) Pina Manufacturing Inc. (To record exchange of inventory) eTextbook and Media (To…

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