Problem 2 Gwynedd Valley Farms purchased a new tractor for $30,000. They estimated the tractor would have a useful life of 5 years and would have a salvage value of $5,000. Gwynedd Valley uses the straight line method and the half year convention. Gwynedd Valley sold the tractor during year 3 for $18,000. Required:

1. Compute the amount of depreciation expense to be taken in Years, 1, 2 and 3.

   Year 1____________ Year 2____________ Year 3____________

2. Prepare the journal entry to record the sale of the tractor in year 3. (Note: tractors are recorded in the Vehicles account).

Problem 3 Harcourt Industries purchased an assembly machine at a cost of $20,000. After they had used the machine for three years an had taken a total of $12,000 of depreciation on the machine, they traded in the machine for a new machine costing $25,000. The dealership gave them a trade-in allowance of $10,000 for the old machine. Prepare the journal entry to record the trade-in of the old machine for the new one. (The assembly machine is properly recorded in the Machinery account)