The Franklin Company completed these transactions involving the purchase and operation of delivery vans.

1989 July 2 Paid cash for a new van, \(\$ 27,360\) plus \(\$ 1,360\) state and city sales taxes. The van was estimated to have a four-year life and a \(\$ 7,200\) salvage value.

July 6 Paid \(\$ 1,512\) for special racks and cleats installed in the van. The racks and cleats did not increase the van's estimated trade-in value.
Dec. 31 Recorded straight-line depreciation on the van.
1990 June 26 Paid \(\$ 1,968\) to install an air-conditioning unit in the van. The unit increased the van's estimated trade-in value \(\$ 240\).
Dec. 31 Recorded straight-line depreciation on the van.
1991 May 15 Paid \(\$ 285\) for repairs to the van's fender damaged when the driver backed into a loading dock.
Dec. 31 Recorded straight-line depreciation on the van.
1992 Sept. 27 Traded the old van and \(\$ 23,448\) in cash for a truck. The truck was estimated to have a three-year life and a \(\$ 7,680\) trade-in value, and the invoice for the exchange showed these items:

The loss on the exchange was considered to be material.
Oct. 2 Paid \(\$ 2,952\) for special cleats and racks installed in the truck.
Dec. 31 Recorded straight-line depreciation on the truck.
\section*{Required}
Prepare general journal entries to record the transactions.
\section*{Problem 9-4A \\ Depreciation and exchanges of plant assets}
(L.O. 2, 3, 5)

Transcribed Image Text:

Price of the truck Trade-in allowance granted. Balance State and city sales taxes Balance paid in cash $29,760 (7,200) $22,560 888 $21,672