Intermediate Accounting I

On 1/1/21, Aleph Company exchanged equipment costing $220,000 with Bais Company. Alephs equipment had accumulated depreciation of $175,000 and FMV of $75,000 on the date of the exchange.

Aleph received from Bais equipment having a FMV of $61,500 plus cash to even out the exchange.

INSTRUCTIONS

A) Journalize the exchange on the books of Aleph assuming the exchange has commercial substance.

B) Journalize the exchange on the books of Aleph assuming the exchange lacks commercial substance.

On 1/1/20, Gimmel Corp issued $400,000 face value, 8%, 10 year bonds. The effective interest rate on that date was 6%. Interest payment dates are 6/30 and 12/31 of each year. On 4/30/21, the bonds were retired at 110 plus accrued interest. Gimmel uses the effective interest method. INSTRUCTIONS A) Determine the issue price of the bonds and prepare a journal entry for their issuance on 1/1/20. B) Prepare journal entries for payment of interest and for amortization on 6/30/20 and 12/31/20. C) Prepare journal entries for the retirement of the bonds on 4/30/21