Exercise 10-18

Pharoah Company purchased an electric wax melter on April 30, 2020, by trading in its old gas model and paying the balance in cash. The following data relate to the purchase.

List price of new melter		$19,908
Cash paid		12,600
Cost of old melter (5-year life, $882 salvage value)		14,112
Accumulated Depreciation-old melter (straight-line)		7,938
Secondhand fair value of old melter		6,552

Prepare the journal entries necessary to record this exchange, assuming that the exchange (a) has commercial substance, and (b) lacks commercial substance. Pharoahs fiscal year ends on December 31, and depreciation has been recorded through December 31, 2019.