Rooster Ltd.trades in a printing press for a newer model.The cost of the old printing press was $45,000,and accumulated depreciation up to the date of the trade-in amounts to $33,000.Rooster Ltd.also pays $38,500 cash for the newer printing press.The journal entry to acquire the new printing press will require a:

Question

Quizplus · Accepted Answer

The cost of the new printing press is $38,500, and to record the trade-in, the cost of the old printing press ($45,000) minus the accumulated depreciation ($33,000) is $12,000. Therefore, the total cost of the acquisition is $38,500 + $12,000 = $50,500, which is debited to Equipment. So, the correct journal entry is:
Equipment           $50,500
Accumulated Depreciation    $33,000
Cash                          $38,500
   Gain on Disposal      $5,000