Question
For each of the four independent situations, prepare the journal entries to record the exchange on the books of each company. Metlock Corporation wishes to
For each of the four independent situations, prepare the journal entries to record the exchange on the books of each company.
Metlock Corporation wishes to exchange a machine used in its operations. Metlock has received the following offers from other companies in the industry.
1. | Bonita Company offered to exchange a similar machine plus $26,220. (The exchange has commercial substance for both parties.) | |
2. | Windsor Company offered to exchange a similar machine. (The exchange lacks commercial substance for both parties.) | |
3. | Sheridan Company offered to exchange a similar machine, but wanted $3,420 in addition to Metlocks machine. (The exchange has commercial substance for both parties.) |
In addition, Metlock contacted Skysong Corporation, a dealer in machines. To obtain a new machine, Metlock must pay $106,020 in addition to trading in its old machine.
Metlock | Bonita | Windsor | Sheridan | Skysong | ||||||
Machine cost | $182,400 | $136,800 | $173,280 | $182,400 | $148,200 | |||||
Accumulated depreciation | 68,400 | 51,300 | 80,940 | 85,500 | 0 | |||||
Fair value | 104,880 | 78,660 | 104,880 | 108,300 | 210,900 |
For each of the four independent situations, prepare the journal entries to record the exchange on the books of each company. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
No. | Account Titles and Explanation | Debit | Credit |
1. | Metlock Corporation | ||
Bonita Company | |||
2. | Metlock Corporation | ||
Windsor Company | |||
3. | Metlock Corporation | ||
Sheridan Company | |||
4. | Metlock Corporation | ||
Skysong Company | |||
(To record exchange of inventory) | |||
(To record cost of inventory) |
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