Problem 10-8

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

1.		Oriole Company offered to exchange a similar machine plus $34,040. (The exchange has commercial substance for both parties.)
2.		Waterway Company offered to exchange a similar machine. (The exchange lacks commercial substance for both parties.)
3.		Wildhorse Company offered to exchange a similar machine, but wanted $4,440 in addition to Kingbirds machine. (The exchange has commercial substance for both parties.)

In addition, Kingbird contacted Sheffield Corporation, a dealer in machines. To obtain a new machine, Kingbird must pay $137,640 in addition to trading in its old machine.

		Kingbird		Oriole		Waterway		Wildhorse		Sheffield
Machine cost		$236,800		$177,600		$224,960		$236,800		$192,400
Accumulated depreciation		88,800		66,600		105,080		111,000		0
Fair value		136,160		102,120		136,160		140,600		273,800

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. Kingbird Corporation Oriole Company