Olsen Company: Journalize asset transactions
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During the year, Olsen Company traded an automobile plus $8,400 in cash to Barry Company for another automobile. The car Olsen used as a trade-in originally had cost $16,000, of which $14,500 has been depreciated.
Olsen also purchased new office furniture during the year. The list price of the furniture was $9,600. Olsen paid $3,350 cash plus gave the furniture company a used truck. This truck had a new book value of $6,250; it had originally cost $19,860, and had recently been appraised at $5,500.
Record the transactions.
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Solution Summary
The 378 word cited solution journalizes the transactions and explains the entries in detail.
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During the year, Olsen Company traded an automobile plus $8,400 in cash to Barry Company for another automobile. The car Olsen used as a trade-in originally had cost $16,000, of which $14,500 has been depreciated.
This is a like kind exchange transaction and would be recorded as follows:
Debit new auto $8400
Credit cash $8400
Debit new auto $1500
Credit old auto $16000
Debit accumulated depreciation $14500
The results of this entry:
1. Clear the old auto off the accounting records
2. Move the remaining basis from the old to the new ...
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