Unipal Company exchanged an old forklift with an original cost of $20,000, accumulated depreciation to date of $15,000, and a fair value of $6,000. The new forklift list price is $25,000. A trade-in allowance of $7,000 was given for the old forklift.

Which of the following is the correct journal entry to record the exchange?

Select one:

a. New Equipment 38,000

Old Equipment 20,000

Cash 18,000

b. New Equipment 23,000

Accumulated Depreciation 15,000

Old Equipment 20,000

Cash 17,000

Gain on Disposal 1,000

c. New Equipment 24,000

Accumulated Depreciation 15,000

Old Equipment 20,000

Gain on Disposal 1,000

Cash 18,000

d. New Equipment 23,000

Accumulated Depreciation 15,000

Equipment 20,000

Cash 18,000