Question 4

Partner Bank recently traded in office fixtures. Here are the facts:

Old fixtures:	New fixtures:
Cost, $91,000	Cash paid, $110,000
Accumulated depreciation, $68,000	Market value, $133,000

Requirements

1.Record Partner Banks trade-in of old fixtures for new ones.

2(working and calculations) +3 (journal entry) =5 Marks

2.Now lets change one fact. Partner Bank feels compelled to do business with Elm Furniture, a bank customer, even though the bank can get the fixtures elsewhere at a better price. Partner Bank is aware that the new fixtures market value is only $126,000. Record the trade-in.

2(working and calculations) +3 (journal entry) =5 Marks