Prepare the Journal Entries to Record the Following Transactions for Eklund

question 42

Essay

Prepare the journal entries to record the following transactions for Eklund Company which has a calendar year end and uses the straight-line method of depreciation.
a) On September 30, 2014, the company exchanged old delivery equipment and $24,000 for new delivery equipment. The old delivery equipment was purchased on January 1, 2012, for $84,000 and was estimated to have a $12,000 residual value at the end of its 5-year life. Depreciation on the delivery equipment has been recorded through December 31, 2013. It is estimated that the fair value of the old delivery equipment is $39,000 on September 30, 2014.
(b) On June 30, 2014, the company exchanged old office equipment and $40,000 for new office equipment. The old office equipment originally cost $80,000 and had accumulated depreciation to the date of disposal of $35,000. It is estimated that the fair value of the old office equipment on June 30 was $50,000. The transaction has commercial substance.

Grasp the concept, accounting treatment, and consequences of dishonored notes receivable.

Know how to record transactions involving notes receivable, including the exchange of notes for accounts receivable.

Understand the calculation and significance of interest on notes receivable.

Distinguish between different types of receivables and their classification on financial statements.