David Drummond and Edward Engels exchange business cars. David gives Edward a car with a basis of $15,000 and a fair market value of $21,500. David receives from Edward a car with a basis of $12,500 (fair market value of $17,000) and $4,500 cash. What is David's recognized gain and basis in the new car?

a. $6,500 and $17,000

b. $4,500 and $15,000

c. $0 and $10,500

d. $2,000 and $12,500

PLEASE explain your answer, it very helpful! Thank you!