Journal for Partial Payment
incl. Depreciation

by Anonymous

Q: Paid 12,500 for a car which cost 20,000 with the garage accepting 7,500 in part exchange. The old car cost 22,000 and had depreciated by 5,000.

A:The journal entry would be:

Dr New car 20,000
Dr Accumulated depreciation 5,000
Dr Loss on exchange 9,500 (22,000 - 5,000 + 12,500 - 20,000)
Cr Old Car (cost price) 22,000
Cr Bank 12,500