Consider each of the items below. Place the proper letter in the blank space provided to indicate the nature of the account or accounts to be debited when recording each transaction using the preferred accounting treatment. Prepayments should be recorded in balance sheet accounts. Disregard income tax considerations unless instructed otherwise.
-Jantzen Company traded its old machine with a net book value of $3,000 plus cash of $7,000 for a new one which had a fair market value of $9,000.

Question

Quizplus · Accepted Answer

The correct answer is A) asset(s) only because when Jantzen Company trades its old machine and cash for a new one, it is essentially exchanging one asset (the old machine plus cash) for another asset (the new machine). The old machine's net book value and the cash paid are debited to reflect the increase in assets (the new machine), while the old machine's book value is removed from the books. This transaction does not involve expenses or accumulated depreciation directly; it's an exchange of assets.

Consider Each of the Items Below