Monty Corporation wishes to exchange a machine used in its operations. Monty has received the following offers from other companies in the industry.

1.Flounder Company offered to exchange a similar machine plus $25,760. (The exchange has commercial substance for both parties.)2.Culver Company offered to exchange a similar machine. (The exchange lacks commercial substance for both parties.)3.Larkspur Company offered to exchange a similar machine, but wanted $3,360in addition to Monty's machine. (The exchange has commercial substance for both parties.)

In addition, Monty contacted Cullumber Corporation, a dealer in machines. To obtain a new machine, Monty must pay $104,160in addition to trading in its old machine.

machine cost accumulated depreciation Fair Value

Monty $179,200 67,200 103,040

Flounder $134,400 50,400 77,280

Culver $170,240 79,520 103,040

Larkspur $179,200 84,000 106,400

Cullumber $145,600 0 207,200

For each of the four independent situations, prepare the journal entries to record the exchange on the books of each company.

No.

Account Titles and Explanation

Debit

Credit

1.

Monty Corporation

Flounder Company

2.

Monty Corporation

Culver Company

3.

Monty Corporation

Larkspur Company

4.

Monty Corporation

Cullumber Company

(To record exchange of inventory)

(To record cost of inventory