1.

Gandalf Engineering had a large Ford delivery truck it traded in for a new Mack truck. The relevant information concerning the two trucks, on May 15, 2017, the date of exchange, follows:

Cost of old Ford truck		$42,700
Accumulated depreciation of old Ford truck		34,100
List price of the new Mack truck		44,600
Trade-in allowance given on the exchange		12,700
Fair value of the old Ford truck		9,700

Prepare the journal entry to record the purchase of the Mack truck using the Ford truck as a trade in. Gandalf paid the appropriate amount of cash for the remaining balance on the exchange. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
May 15	Accumulated Depreciation - Vehicles Gain on Disposal No Entry Vehicles - Ford Cash Vehicles - Mack
	Accumulated Depreciation - Vehicles Cash Vehicles - Ford Vehicles - Mack Gain on Disposal No Entry
	Accumulated Depreciation - Vehicles Vehicles - Ford Gain on Disposal Cash Vehicles - Mack No Entry
	Accumulated Depreciation - Vehicles Gain on Disposal Vehicles - Ford Cash No Entry Vehicles - Mack
	No Entry Vehicles - Ford Cash Vehicles - Mack Accumulated Depreciation - Vehicles Gain on Disposal

If Gandalf had not offered the Ford truck as a trade-in, what amount should have been recognized on the purchase of the Mack truck?

Purchase price

$ less any discounts allowedless any discounts received

2.

On December 27, 2014, Blossom Windows purchased a piece of equipment for $105,500. The estimated useful life of the equipment is either three years or 61,000 units, with a residual value of $7,750. The company has a December 31 fiscal year end and normally uses straight-line depreciation. Management is considering the merits of using the units-of-production or the diminishing-balance method of depreciation instead of the straight-line method. The actual numbers of units produced by the equipment were 10,250 in 2015, 17,750 in 2016, and 32,000 in 2017. The equipment was sold on January 5, 2018, for $15,000.

(a)

Calculate the depreciation for the equipment for 2015 to 2017 under

1.		the straight-line method
2.		the diminishing-balance method, using a 40% rate; and
3.		units-of-production

(Round depreciable amount per unit to 3 decimal places, e.g. 1.252 and the final answers to 0 decimal places, e.g. 126.)

	Depreciation Expense
	Straight-Line	Diminishing-Balance	Units-of-Production
2015	$	$	$
2016
2017

3.

At Reilly Companys year end of August 31, 2017, the company has an instalment note payable with a total outstanding balance of $1,250,000 to be repaid evenly each month plus interest over the next 10 years. How much would Reilly report for this item on the August 31, 2017 balance sheet under non-current liabilities?

$125,000

$1,125,000

$1,250,000

$1,239,583