Question

Wall Corporation exchanges old equipment for new equipment. The original cost of the old equipment was $100,000, and its accumulated depreciation at the date of exchange was $60,000. The new asset received had a fair value of $80,000 and a book value of $65,000. The journal entry to record this exchange will include which of the following entries? Credit gain on exchange of asset $4000 Credit equipment $100,000 Debit accumulated depreciation $60,000 Debit equipment $80,000 Debit equipment $65,000 Credit equipment $80,000 Credit accumulated depreciation $60,000

Answer 1

The T-account balance sheet for the bank would list $50 in reserves, $70 in government bonds, and $500 in loans as assets, and $400 in deposits as liabilities. The bank's net worth is calculated by subtracting the total liabilities from the total assets, resulting in a net worth of $220.

Step-by-step explanation:

To set up a T-account balance sheet for a bank with deposits of $400, reserves of $50, government bonds worth $70, and loans of $500, we must list the bank's assets and liabilities. The assets include reserves, government bonds, and loans, while the liabilities are the deposits from customers.

Here's how the T-account would look like:

Assets:

Reserves: $50

Government Bonds: $70

Loans: $500

Liabilities:

Deposits: $400

To calculate the bank's net worth, we take the total assets and subtract the total liabilities. In this case, the bank's total assets are $620 ($50 in reserves + $70 in government bonds + $500 in loans), and the total liabilities are $400 in deposits. Therefore, the bank's net worth is $620 - $400 = $220.

Answer 2

See explanation section

Step-by-step explanation:

Wall corporation exchanges equipment. Therefore, 1 equipment purchases and another one sells. So, a debit entry and a credit entry for equipment will be needed to record the transaction. Exchanging helps to gain on equipment. The gain amounted to =

Old equipment,

Cost price = $100,000

(-) Accumulated depreciation = $ 60,000

Book value before exchanging = $40,000

As the company received a new one by exchanging the old equipment,

The gain on equipment -

New equipment = $80,000

Book value of old one = $40,000

Gain = $40,000

As the company exchanged old equipment, the depreciation related to that old one became a debit entry.

Therefore, the following entry to be recorded -

Debit Equipment $80,000

Debit accumulated depreciation $60,000

Credit Equipment $100,000

Credit Gain on exchange of asset 40,000