Bridgeport Inc. has negotiated the purchase of a new piece of automatic equipment at a price of $10,080 plus trade-in, f. o.b. factory. Bridgeport Inc. paid $10,080 cash and traded in used equipment. The used equipment had originally cost $78,120; it had a book value of $52,920 and a secondhand fair value of $60,228, as indicated by recent transactions involving similar equipment. Freight and installation charges for the new equipment required a cash payment of $1,386. Required:
a. Prepare the general journal entry to record this transaction, assuming that the exchange has commercial substance.
b. Assuming the same facts as in (a) except that fair value information for the assets exchanged is not determinable. Prepare the general journal entry to record this transaction.

a. Price = $10,080

Cash = $10,080

Original Cost= $78,120

Book Value=  $52,920

Second hand Market Value = $60,228

Freight and installation charges = $1,386

Total Cost of Equipment = Cash + Second hand Market Value + Freight and installation charges = $10,080 + $60,228 + $1,386 = $71,694

Depreciation = Original Cost - Book value = $78,120 - $52,920 = $25,200

Total cash paid = Cash + Freight and installation charges = $10,080 + $1,386 =  $11,466

                Journal Entries

Item                         Debit        Credit

New Equipment   $71,694

Depreciation         $25,200

Old Equipment                         $78,120  

Cash                                          $11,466

Gain on Equipment Disposal   $7,308

b. Price = $10,080

Cash = $10,080

Original Cost= $78,120

Book Value=  $52,920

Second hand Market Value = $60,228

Freight and installation charges = $1,386

Total Cost of Equipment = Cash + Second hand Market Value + Freight and installation charges = $10,080 + $52,920 + $1,386 = $64,386

Depreciation = Original Cost - Book value = $78,120 - $52,920 = $25,200

Total cash paid = Cash + Freight and installation charges = $10,080 + $1,386 =  $11,466

                Journal Entries

Item                         Debit        Credit

New Equipment   $64,386

Depreciation         $25,200

Old Equipment                         $78,120  

Cash                                          $11,466

b. condominum i think