Instructions: Prepare the necessary journal entries to record the following transactions in 2014 for Dorsett Company.

May 1 Exchanged old store equipment and $80,000 cash for new store equipment. The old store equipment originally cost $160,000 and had a book value of $100,000 on the date of exchange. The old store equipment had a fair market value of $144,000 on the date of exchange. Assume depreciation on the old equipment has already been recorded for the current year. The exchange had commercial substance.

July 31 Exchanged a delivery truck and $40,000 cash for a new delivery truck. The old delivery truck originally cost $46,000 and had accumulated depreciation of $31,000 on the date of exchange. The fair market value of the old delivery truck on the date of exchange was $12,000. Assume the depreciation on the truck has already been recorded for the current year. The exchange had commercial substance.

Aug. 31 Equipment with a 5-year useful life was purchased on January 1, 2011, for $84,000 and was sold for $30,000. The equipment had been depreciated using the straight- line method with an estimated salvage value of $12,000. Depreciation Expense was last recorded on December 31, 2013.