Cyber Systems completed the following transactions involving delivery trucks:

2017

Aug 7: Paid cash for a new delivery truck, $38,830 plus $2,330 in additional costs required to put the asset in use. The truck was estimated to have a 5-year service life and a $6,000 salvage value.

2019

July 11: Traded-in the old truck and paid $42,100 in cash for the new truck. The new truck is estimated to have a 6-year service life and a salvage value of $6,200. The invoice for the exchange indicated the following:

Invoice price of the new truck $57,620

Options required to put the truck in use 2,280

Trade-in allowance - old truck (17,800)

Cash paid out $42,100

Cyber Systems policy is to use the Nearest Whole month method for recording part year depreciation.

Required:

1. Prepare journal entries to record the acquisition of the delivery truck on August 7, 2017

2. Prepare the adjusting journal entries to record Straight Line depreciation at December 31, 2017 and December 31, 2018 (one journal entry for each year).

3. Prepare the adjusting journal entry to bring the depreciation on the old truck up to date as of its disposal date.

4. Record the acquisition of the new truck on July 11, 2019, including any gain or loss on the exchange.

5. Prepare the journal entry to record Straight Line depreciation on the new truck at December 31, 2019.

Explanations are not required, but please date the entries and show your calculations.

Account Titles for your journal entries:

• Cash
• Equipment
• Accumulated Depreciation Equipment
• Depreciation Expense
• Gain / Loss on Exchange