Equipment costing $123,000 has accumulated depreciation of $95,000. The equipment is a trade-in for new equipment costing $188,000. If the trade-in value received for the old equipment is $34,000, the journal entry to record this transaction is to:
A) debit Equipment (New) for $188,000, debit Accumulated Depreciation - Equipment for $95,000, credit Equipment (Old) for $123,000 and credit Cash for $160,000.
B) debit Equipment (New) for $188,000, debit Accumulated Depreciation - Equipment for $95,000, credit Equipment (Old) for $123,000, credit Cash for $154,000, and credit Gain on Exchange of Assets for $6,000.
C) debit Equipment (New) for $188,000, debit Accumulated Depreciation - Equipment for $95,000, debit Loss on Exchange of Assets for $28,000, credit Equipment (Old) for $123,000 and credit Cash for $188,000.
D) debit Equipment (New) for $188,000, and credit Cash for $188,000.
Correct Answer:
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