Problem C Eagle Moving Company purchased a new moving van on 2009 October 1. The cash price of the new van was USD 33,750, and the company received a trade-in allowance of USD 5,600 for a 2007 model. The balance was paid in cash.

The 2007 model had been acquired on 2007 January 1, at a cost of USD 22,500.

Depreciation has been recorded through 2008 December 31, on a straight-line basis, with three years of expected useful life and no expected salvage value. The exchange has no commercial substance.

Prepare journal entries to update the depreciation and to record the exchange of the moving vans.