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Larkspur, Inc. exchanges old delivery equipment for new delivery equipment. The book value of the old delivery equipment is $36,900 (cost $66,400 less accumulated depreciation $29,500). Its fair value is $45,500, and cash of $5,300 is paid. Prepare the entry to record the exchange.

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Answer:

Account                                       Credit                    Debit

Equipment (new)                         $50,800

Accumulated Depreciation        $29,500

Equipment (old)                                                         $66,400

Gain on disposal of asset                                         $8,600

Cash                                                                           $5,300

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