Brief exercise 10-08sheffield corporation traded a used truck (cost $28,400, accumulated depreciation $25,560) for a small computer with a fair value of $4,686. sheffield also paid $710 in the transaction. prepare the journal entry to record the exchange.

Explanation:

The journal entry is shown below:

Computer A/c Dr $4,686

Accumulated depreciation A/c Dr $25,560

            To Truck A/c $28,400

            To Cash A/c $710

            To Gain on exchange A/c $1,136

(Being the exchange is recorded)

The gain on exchange would be

= $25,560 + $4,686 - $28,400 - $710

= $1,136 (Balancing figure)

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