Q.1

Colaw Company exchanges equipment with Eaton Company and Mantle Company exchanges equipment with Fiero Company. The following information pertains to the exchanges:

Colaw CompanyMantle Company

Equipment (cost)$114,000$96,000

Accumulated depreciation50,00045,000

Fair market value of the equipment75,00042,000

Cash paid45,000-0-

Instructions

Prepare the journal entries to record the exchanges on the books of Colaw Company and Mantle Company. The transaction has commercial substance.

Q.2

Dodd Delivery Company and Hess Delivery Company exchanged delivery trucks on January 1, 2011. Dodd's truck cost $84,000, had accumulated depreciation of $69,000, and has a fair market value of $9,000. Hess's truck cost $63,000, had accumulated depreciation of $54,000, and has a fair market value of $9,000.

Instructions

(a)Journalize the exchange for Dodd Delivery Company.

(b)Journalize the exchange for Hess Delivery Company