On January 5, 2012, Mountain View Company purchased construction equipment for $698,400, with a useful life of six years and an estimated salvage value of $87,000. The company uses the straight-line method of depreciation. On July 3, 2016, this equipment was traded for new similar construction equipment that has a value of $800,000. The company paid $595,000 in cash and was given a trade-in allowance of $205,000 for the old equipment.

Prepare the general journal entries needed on July 3, 2016, to record the trade-in.

Please do not copy from Chegg otherwise I have to report the answer. Explain the answer thoroughly by showing each step of the calculation.