Question:

.2Jones Corp. purchased equipment for $45,000. Total depreciation of $36,000 was recorded. On January 1, 2017, Jones exchanged the equipment for new equipment, paying $56,000 cash. The market value of the new equipment is $65,000. Choose correct journal entry to record this transaction. Assume the exchange has commercial substance.

C)

Equipment (Old)	65,000
Accumulated DepreciationEquipment	36,000
Equipment (New)		45,000
Cash		56,000

B)

Equipment (new)	65,000
Accumulated DepreciationEquipment	36,000
Equipment (old)		56,000
Cash		45,000

A)

Equipment (new)	65,000
Accumulated DepreciationEquipment	36,000
Equipment (old)		45,000
Cash

3.Dominic and Morgan are partners. Dominic has a capital balance of $360,000 and Morgan has a capital balance of $225,000. Morgan sells $125,000 of his ownership to Lance. Which of the following is true of the items in balance sheet?

Assets will decrease by $125,000.

The total equity decreases by $125,000.

Assets will increase by $125,000.

The total equity remains unchanged.