On January 5, 2015, Mountain View Company purchased construction equipment for $710,500, with a useful life of six years and estimated salvage value of $100,000. The company uses the straight-line method of depreciation. On July 3, 2019, this equipment was traded for new similar construction equipment that has a value of $800,000. The company paid $582,000 cash and was given a trade-in allowance of $218,000 for the old equipment.
1. Give the general journal entry needed on July 3, 2019, to record the trade-in. (Assume that the entry to bring depreciation up to date has been made.)
2. Assume the same facts as stated above, except that Mountain View paid cash of $514,750 on the trade-in and was given an allowance of $285,250 for the old equipment. Give the journal entry to record the trade-in.