Exchange of Truck
On January 2, 2008, Butler Delivery Company traded with a dealer an old delivery truck for a newer model. Data relative to the old and new trucks follow:
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Old truck: |
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Original cost |
$18,000 |
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Accumulated depreciation as of January 2, 2008 |
15,000 |
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New truck: |
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List price |
$20,000 |
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Cash price without trade in |
19,400 |
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Cash paid with trade in |
17,800 |
1. Give the journal entries on Butler’s books to record the purchase of the new truck.
2. Give the journal entries on Butler’s books if the cash paid was $15,600 and that amount is considered “large.”