On January 1, 2017, Frostburg Company purchased for $68,500, equipment having a service life of six...

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Accounting

On January 1, 2017, Frostburg Company purchased for $68,500,equipment having a service life of six years and an estimatedresidual value of $4,000. Frostburg has recorded depreciation ofthe equipment using the straight-line method. On December 31, 2019,before making any annual adjusting entries, the equipment wasexchanged for new machinery having a fair value of $35,000. Thetransaction has commercial substance. Use this information toprepare all General Journal entries (without explanation) requiredto record the events for December 31, 2019.

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Answer Equipment 68500 Estimated Residual Value 4000 Service Life 6 Years Depreciation Straight line Cost of Asset Residual value No of Years of life 68500 4000 6 10750 Per Annum Actual Equipment Value after Depreciation 68500 10750 57750 Loss on Exchange of Machinery with Equipment 57750 35000 22750 Journal Entries as on 31st Dec 2019 Sr No See Answer

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