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Q . Ramirez Company exchanged equipment used in its manufacturing operations plus $6,000 in cash for similar equipment used in the operations of Kennedy Company.

Q. Ramirez Company exchanged equipment used in its manufacturing operations plus $6,000 in cash for similar equipment used in the operations of Kennedy Company. The following information pertains to the exchange.

Ramirez Co Kennedy Co

Equipment (cost) 84,000 $84,000

Accumulated depreciation 57,000 30,000

Fair value of equipment 40,500 46,500

Cash given up 6,000

Instructions

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

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