Wildhorse Company purchased equipment on January 2, 2021, for $118,600. The equipment had an estimated useful life of 5 years with an estimated salvage value of $10,800. Wildhorse uses straight-line depreciation on all assets. On January 2, 2025, Wildhorse exchanged this equipment plus $12,300 in cash for newer equipment. The old equipment has a fair value of $54,800. Prepare the journal entry to record the exchange on the books of Wildhorse 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. List all debit entries before credit entries.) Date Account Titles and Explanation Jan. 2 eTextbook and Media List of Accounts Debit Credit

Wildhorse Company purchased equipment on January 2, 2021, for $118,600. The equipment had an estimated useful life of 5 years with an estimated salvage value of $10,800. Wildhorse uses straight-line depreciation on all assets. On January 2, 2025, Wildhorse exchanged this equipment plus $12,300 in cash for newer equipment. The old equipment has a fair value of $54,800. Prepare the journal entry to record the exchange on the books of Wildhorse 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. List all debit entries before credit entries.) Date Account Titles and Explanation Jan. 2 eTextbook and Media List of Accounts Debit Credit

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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Concept explainers

Contingent Liabilities and Provisions

A contingent liability can be defined as a liability the occurrence of which is dependent upon the happening of an uncertain future event. It is generally recorded in the books only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly.

Question

Wildhorse Company purchased equipment on January 2, 2021, for $118,600. The equipment had an estimated useful life of 5 years
with an estimated salvage value of $10,800. Wildhorse uses straight-line depreciation on all assets. On January 2, 2025, Wildhorse
exchanged this equipment plus $12,300 in cash for newer equipment. The old equipment has a fair value of $54,800.
Prepare the journal entry to record the exchange on the books of Wildhorse 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. List all debit entries before credit entries.)
Date Account Titles and Explanation
Jan. 2
e Textbook and Media
List of Accounts
Debit
Credit
100

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