Cannon Ltd. purchased an electric wax melter on April 30, 2017, by trading in its old gas model and paying the balance in cash. The following data relate to the purchase:

List price of new melter ............................................................... $15,800

Cash paid ................................................................................. 10,000

Cost of old melter (five-year life, $700 residual value) ............................ 11,200

Accumulated depreciation on old melter (straight-line) ............................. 6,300

Market value of old melter in active secondary market .............................. 5,200

Instructions

Assuming that Cannon's fiscal year ends on December 31 and depreciation has been recorded through December 31, 2016, prepare the journal entry(ies) that are necessary to record this exchange. Give reasons for the accounting treatment you used.