Problem 10-08

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

1.Blossom Company offered to exchange a similar machine plus $23,920. (The exchange has commercial substance for both parties.)2.Blue Company offered to exchange a similar machine. (The exchange lacks commercial substance for both parties.)3.Kingbird Company offered to exchange a similar machine, but wanted $3,120in addition to Splish's machine. (The exchange has commercial substance for both parties.)

In addition, Splish contacted Oriole Corporation, a dealer in machines. To obtain a new machine, Splish must pay $96,720in addition to trading in its old machine.

Splish

Blossom

Blue

Kingbird

Oriole

Machine cost$166,400$124,800$158,080$166,400$135,200Accumulated depreciation62,40046,80073,84078,000-0-Fair value95,68071,76095,68098,800192,400

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.

Splish Corporation

Blossom Company

2.

Splish Corporation

Blue Company

3.

Splish Corporation

Kingbird Company

4.

Splish Corporation

Oriole Company

(TProblem 10-08

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

1.Blossom Company offered to exchange a similar machine plus $23,920. (The exchange has commercial substance for both parties.)2.Blue Company offered to exchange a similar machine. (The exchange lacks commercial substance for both parties.)3.Kingbird Company offered to exchange a similar machine, but wanted $3,120in addition to Splish's machine. (The exchange has commercial substance for both parties.)

In addition, Splish contacted Oriole Corporation, a dealer in machines. To obtain a new machine, Splish must pay $96,720in addition to trading in its old machine.

Splish

Blossom

Blue

Kingbird

Oriole

Machine cost$166,400$124,800$158,080$166,400$135,200Accumulated depreciation62,40046,80073,84078,000-0-Fair value95,68071,76095,68098,800192,400

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.

Splish Corporation

Blossom Company

2.

Splish Corporation

Blue Company

3.

Splish Corporation

Kingbird Company

4.

Splish Corporation

Oriole Company

(To record exchange of inventory)

(To record cost of inventory)

o record exchange of inventory)

(To record cost of inventory)