Global FPO Interview Questions and Answers

Journal entry for purchasing a new car on loan and exchanging the old car with accumulated depreciation.

• Debit the new car account for the cost of the new car

• Credit the loan payable account for the amount of the loan

• Debit the accumulated depreciation account for the amount of depreciation on the old car

• Credit the old car account for the book value of the old car

• Debit or credit any cash paid or received in the exchange