Question

Navajo Corporation traded a used truck (cost $20,000, accumulated depreciation $18,000) for a small computer worth $3,300. Navajo also paid $500 in the transaction.Prepare the journal entry to record the exchange. (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_______________________ ______________ _______________ _______________________ _______________ ________________ _______________________ ________________ ________________ _______________________ _________________ ______________________________________ __________________ _______________

Answer 1

Answer and Explanation:

The journal entry is shown below:

Equipment/Computer $3,300    

Accumulated depreciation -Truck $18,000    

        To Truck $20,000  

        To Gain on disposal of truck  $800  

       To Cash  $500

(Being the exchange is recorded)

Here the equipment and accumulated depreciation is debited as it increased the assets while the truck, gain and cash is credited as it decreased the assets but at the same time it increased the revenue