The following transactions occurred at Wilson Company during 2019:

INSTRUCTIONS

In each case, assume that straight-line depreciation is used and that depreciation was last recorded on December 31, 2018. Compute depreciation to the nearest whole dollar.
1. Record in general journal form the two trade-in transactions on April 2 and July 8.
2. Record the sale of the refrigeration unit, assuming:
a. the sales price was $27,000.
b. the sales price was $20,400.

Analyze: What accounting concepts underlie the accounting treatments for the transactions of April 2 and July 8?

Transcribed Image Text:

DATE TRANSACTIONS Apr. 2 Traded in a copy machine (Office Equipment) that had been purchased for $10,400 on December 29, 2015. Straight-line depreciation of the old copier has been based on an estimated useful life of five years, with salvage value of $1,600. The new copier had a purchase price and value of $24,000. Wilson received a trade-in allow- ance of $7,000 on the old machine and paid cash of $17,000. The new copier has a useful life of five years and an estimated salvage value of $1,200. July 8 Exchanged a delivery truck (Vehicles) for a new one with a list price of $22,000, estimated useful life of five years, and salvage value of $4,200. A trade-in allow- ance of $5,000 was received on the old truck, which had been purchased on July 1, 2016, for $16,500. Depreciation on the old truck has been based on an estimated $2,500 salvage value and a five-year life. Sept. 23 Sold a refrigeration unit (Store Equipment) for cash (see Instruction 2). The unit was purchased on January 3, 2016, for $64,000 and was depreciated on the straight-line basis, using an estimated life of six years and a salvage value of $4,000.