Question

Sandhill Corporation traded a used truck (cost $23,600, accumulated depreciation $21,240) for a small computer with a fair value of $3,894. Sandhill also paid $590 in the transaction.Prepare the journal entry to record the exchange, assuming the exchange lacks commercial substance.

Answer 1

Step-by-step explanation:

The journal entry is shown below:

Accumulated Depreciation A/c 21,240

Computer A/c $3,894

To Truck A/c $23,600

To Cash A/c $590

To Gain on exchange A/c $944

(Being the exchange recorded)

The gain on exchange would be

= $21,240 + $3,894 - $590 - $23,600

= $944

The debit and credit is always matched