Question

Haley's Hamburger's has just completed an exchange of some of their long-term assets with Barry's Burgerlicious. Haley's receives a delivery truck and gives up a piece of machinery. The fair value and book value of the machinery were $31,000 and $24,000 (original cost of $35,000 less accumulated depreciation of $11,000), respectively. Since the delivery truck was worth $36,000, Haley's paid an additional $5,000 in cash to Barry's. Record this exchange for Haley's Hamburger's.

Answer 1

Debit Delivery truck for $36,000

Debit Machinery acccumulated depreciatio for $11,000

Credit Machinery for $35,000

Credit Cash for $5,000

Credit Gains on disposal of Machinery for $7,000

Step-by-step explanation:

The entries will be as follows in the book of Haley's Hamburger's

Details Dr ($) Cr ($)

Delivery truck 36,000

Accumulated dep. - Machinery 11,000

Machinery 35,000

Cash 5,000

Gains on disposal of Machinery 7,000

To record an exchange of some long-term assets with Barry's Burgerlicious.