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What was the outstanding loan balance on old equipment?
What is the new loan amount?
It can all be done in an "Expense" rather than a Journal Entry but with a little more info than merely going by the difference between $46k and $20k and guessing new loan is $26
We still have to address getting the old asset completely off the books in this and how much depreciation you will have to recapture on Form 4797. That's a tax item and not wholly an accounting item that needs to be attached to the trade/loan calculation
The original Loan is still around $14,000. Then we purchased a new piece at $46,000 but traded in equipment (all under this same loan originally) for $20,000- what I need to know is how do I made the journal entry for the trade in? I would Debit the loan for $20,000 but what would I credit? (would I credit equity?)
New fixed asset is $46000. Less trade in of 20? or after trade in = 20k to pay plus original loan or in addition to original loan? I am going to make some assumptions and you can correct me
DR Fixed Asset New $46000
CR Fixed Asset Old $26000
CR Loan $20000 which puts your loan now at $34k +/- ? Hard to imagine that you traded in something with a loan on it at half value of new and that loan amount stayed the same without any cash out of pocket
Increasing loan is credit, paying down is debit.
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