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Olsen Company: Journalize asset transactions

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.

Solution Preview

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 ...

Solution Summary

The 378 word cited solution journalizes the transactions and explains the entries in detail.

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