Prepare the journal entries to record the following transactions for Ogleby Company which has a calendar year end and uses the straight-line method of depreciation.
a) On September 30 2017 the company exchanged old delivery equipment and $36000 for new delivery equipment. The old delivery equipment was purchased on January 1 2015 for $126000 and was estimated to have a $18000 salvage value at the end of its 5-year life. Depreciation on the delivery equipment has been recorded through December 31 2016. It is estimated that the fair value of the old delivery equipment is $54000 on September 30 2017.
(b) On June 30 2017 the company exchanged old office equipment and $40000 for new office equipment. The old office equipment originally cost $80000 and had accumulated depreciation to the date of disposal of $35000. It is estimated that the fair market value of the old office equipment on June 30 was $60000. The transaction has commercial substance.

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Lindia Cambridge · Accepted Answer

Final Answer :  (a)    September 30, 2017   Depreciation Expense 16 , 200 Accumulated Depreciation-Equipment.  16 , 200  (To record depreciation expense for the first 9 months \begin{array}{lrr}  	ext { September 30, 2017 }  & \ 	ext {  Depreciation Expense}  & 16,200\ 	ext {Accumulated Depreciation-Equipment.  }  & & 16,200\ 	ext {  (To record depreciation expense for the first 9 months}  & \end{array}  September 30, 2017   Depreciation Expense Accumulated Depreciation-Equipment.   (To record depreciation expense for the first 9 months ​ 16 , 200 ​ 16 , 200 ​ of 2017. $108000 ÷ 5 years = $21600 × 9/12 = $16200)

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