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We just traded in an old truck for a new one and paid cash for the balance. Both trucks were recorded as assets. How do we record the transaction with the trade in?
Original commenter did not share additional details
Malcolm ZimanAnswer
Apr 16, 2019 2:40 PM UTC
@498399 wrote:
Hmm, thanks but I'm not sure I follow. How do I record the removal of the old truck, which I have under Fixed Assets - Vehicles?
It seems that the robot that answered the question determined that the word "trade" was the key word
Eg amounts:
Cost price of new truck = $40k
Cost price of old truck = $35k
Accum Depreciation of old truck = $25k
Trade-in value = $6K
The Journal Entry to record this:
Debit Truck Fixed Asset $40k
Credit Truck Fixed Asset $35k
Debit Accum Depreciation Fixed Asset $25k
Debit Loss on Disposal of Fixed Assets (other expense account) $4k
Credit Bank $34k