Carlos Arruza Company exchanged equipment used in its manufacturing operations plus $7,773 in cash for similar equipment used in the operations of Tony LoBianco Company. The following information pertains to the exchange.

Carlos Arruza Co. Tony LoBianco Co.

Equipment (cost) $72,548 $72,548

Accumulated depreciation 49,229 25,910

Fair value of equipment 32,388 40,161

Cash given up 7,773

a) Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange lacks 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.