Practice Exercise 10-04 Your answer is partially correct. Try again. Metlock Inc. purchased a commercial grade soft-serve ice cream machine on September 30, 2017. Metlock traded in its existing machine and paid cash in the transaction. The details of the transaction are as follows: List price of new freezer Cash paid . Cost of old machine (4-year life, $1,200 salvage value) Accumulated depreciation-old machine (straight-line) Secondhand fair value of old machine $16,600 11,040 14,000 6,400 5,360 Prepare the journal entries necessary to record this exchange, assuming that the exchange (a) has commercial substance, and (b) lacks commercial substance. Metlock's fiscal year ends on December 31, and Metlock recorded depreciation on the old machine through September 30, 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Debit Credit No. Account Titles and Explanation (a) Exchange has commercial substance: X Depreciation Expense 3200 X= 3200 Accumulated Depreciati (To record current depreciation) Accumulated Depreciation 4400 x Equipment 166001 Cash 11040 x Equipment 14000 X 4040 Loss on Disposal of Equ (To record exchange of the machine) (b) Exchange lacks commercial substance: Depreciation Expense 3200 x! X Accumulated Depreciati (To record current depreciation) 3200 x Accumulated Depreciation- 44001 X Equipment 20640 Cash 11040 X Equipment 14000 x X x (To record exchange of the machine) Click if you would like to Show Work for this question: Open Show Work