(L04) (Nonmonetary Exchange) Busytown Corporation, which manufactures shoes, hired a recent college graduate to work in its accounting department. On the first day of work, the accountant was assigned to total a batch of invoices with the use of an adding machine. Before long, the accountant, who had never before seen such a machine, managed to break the machine. Busytown Corporation gave the machine plus $340 to Dick Tracy Business Machine Company (dealer) in exchange for a new machine. Assume the following information about the machines.

Busytown Corp.

(Old Machine)

Dick Tracy Co.

(New Machine)

Machine cost $290 $270 Accumulated depreciation 140 –0–

Fair value 85 425 Instructions For each company, prepare the necessary journal entry to record the exchange. (The exchange has commercial substance.)