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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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Chapter
Section
BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

Prepare journal entries for the following transactions:

  1. a. A machine with a cost of $10,000 and accumulated depreciation of $8,000 was sold for $2,500.
  2. b. A machine with a cost of $10,000 and accumulated depreciation of $8,000 was traded for a new machine with a market value of $12,000. Cash of $9,500 was also paid.

a.

To determine

Journalize the transaction (a).

Explanation

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

  • Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.
  • Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

Journalize the transaction (a).

DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
Cash2,500
Accumulated Depreciation–Machine8,000
Machine10,000
Gain on Sale of Machine500
(Record sale of machine)

Table (1)

Description:

  • Cash is an asset account. Since cash is received, asset account increased, and an increase in asset is debited...

b.

To determine

Journalize the transaction (b).

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