Willis Bus Service traded in a used bus for a new one. Theoriginal cost of the old bus was $52,000. Accumulateddepreciation at the time of the trade-in amounted to $34,000.The new bus cost $67,000, but Willis was given a trade-inallowance of $10,000.a. What amount of cash did Willis have to pay to acquire thenew bus?b. Compute the gain or loss on the disposal for financialreporting purposes.c. Explain how the gain or loss would be reported in thecompany's income statement.Solutionsa. $57,000 ($67,000 less $10,000 trade-in allowance)b. Trade-in allowanceLess: Book value ($52,000 - $34,000)Loss on trade-in$ 10,000c. The $8,000 loss on trade-in is reported in Willis Bus Service's income statementfollowing the amount of income from operations.(18,000)(8,000)

The objective of the question is to determine the cash amount Willis Bus Service had to pay to…

Answered: Willis Bus Service traded in a used bus…

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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Mathews Bus Service traded in a used bus for a new one. The original cost of the old bus was$52,000. Accumulated depreciation at the time of the trade-in amounted to $34,000. The new buscost $65,000, but Mathews was given a trade-in allowance of $10,000.a. What amount of cash did Mathews have to pay to acquire the new bus?b. Compute the gain or loss on the disposal for financial reporting purposes.c. Explain how the gain or loss would be reported in the company’s income statement.
Willis Bus Service traded in a used bus for a new one. The original cost of the old bus was $52,900. Accumulated depreciation at the time of the trade-in amounted to $35,300. The new bus cost $71,000 but Willis was given a trade-In allowance of $10,600. a. What amount of cash did Willis have to pay to acquire the new bus? b. Compute the gain or loss on the disposal for financial reporting purposes. Complete this question by entering your answers in the tabs below. Required A Required B What amount of cash did Willis have to pay to acquire the new bus? Payment of cash
A used delivery truck was traded in for a new truck. Information relating to the trucks follows: Used truck: Cost P1,600,000 Accumulated depreciation 1,200,000 New truck: List price 1,950,000 Cash price without trade-in 1,900,000 Cash price with trade-in 1,560,000 If the fair value of the old truck is not determinable, the loss on trade-in is
Arca Salvage purchased equipment for $10,000. Arca recorded total depreciation of $8,000 on the equipment. Assume that Arca exchanged the old equipment for new equipment, paying $4,000 cash. The fair market value of the new equipment is $5,000. Journalize Arca's exchange of equipment. Assume this exchange has commercial substance. Let's begin by calculating the gain or loss on the exchange of equipment. (Enter a loss with a minus sign or parentheses.) Market value of assets received Less: Book value of asset exchanged Cash paid Gain or (Loss)
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