Martinez Company exchanged equipment used in its manufacturing operations plus $3,960 in cash for similar equipment used in the operations of Sandhill Company. The following information pertains to the exchange. Martinez Co. Sandhill Co. Equipment (cost) $36,960 $36,960 Accumulated depreciation 25,080 13,200 Fair value of equipment 16,500 20,460 Cash given up 3,960

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

b. Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange has commercial substance.