The Whitestone Company completed these transactions involving the purchase and operation of delivery trucks.

1989 June 26 Paid cash for a new truck, \(\$ 34,200\) plus \(\$ 1,710\) state and city sales taxes. The truck was estimated to have a four-year life and a \(\$ 9,000\) salvage value.

July 5 Paid \(\$ 1,890\) for special racks and cleats installed in the truck. The racks and cleats did not increase the truck's estimated trade-in value.

Dec. 31 Recorded straight-line depreciation on the truck.

1990 June 25 Paid \(\$ 2,460\) to install an air-conditioning unit in the truck. The unit increased the truck's estimated trade-in value \(\$ 300\).

Dec. 31 Recorded straight-line depreciation on the truck.

1991 Mar. 15 Paid \(\$ 330\) for repairs to the truck's fender damaged when the driver backed into a loading dock.

Dec. 31 Recorded straight-line depreciation on the truck.
1992 Aug. 31 Traded the old truck and \(\$ 29,310\) in cash for a new truck. The new truck was estimated to have a three-year life and a \(\$ 9,600\) trade-in value, and the invoice for the exchange showed these items:

The loss on the exchange was considered to be material.
Sept. 4 Paid \(\$ 3,690\) for special cleats and racks installed in the truck.
Dec. 31 Recorded straight-line depreciation on the new truck.
\section*{Required}
Prepare general journal entries to record the transactions.
Problem 9-4 Depreciating and exchanging 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. $37,200 (9,000) $28,200 1,110 $29,310