Question 3

Gandalf Engineering had a large Ford delivery truck it traded in for a new Mack truck. The relevant information concerning the two trucks, on May 15, 2017, the date of exchange, follows:

Cost of old Ford truck

$43,200

Accumulated depreciation of old Ford truck

33,700

List price of the new Mack truck

45,800

Trade-in allowance given on the exchange

13,900

Fair value of the old Ford truck

10,900

Prepare the journal entry to record the purchase of the Mack truck using the Ford truck as a trade in. Gandalf paid the appropriate amount of cash for the remaining balance on the exchange.

If Gandalf had not offered the Ford truck as a trade-in, what amount should have been recognized on the purchase of the Mack truck?

Purchase price

$

less any discounts allowed

less any discounts received