Question
Sheridan Corporation wishes to exchange a machine used in its operations. Sheridan has received the following offers from other companies in the industry. 1. Skysong
Sheridan Corporation wishes to exchange a machine used in its operations. Sheridan has received the following offers from other companies in the industry.
1. Skysong Company offered to exchange a similar machine plus $28,060. (The exchange has commercial substance for both parties.)
2. Concord Company offered to exchange a similar machine. (The exchange lacks commercial substance for both parties.)
3. Marigold Company offered to exchange a similar machine, but wanted $3,660 in addition to Sheridan's machine. (The exchange has commercial substance for both parties.)
In addition, Sheridan contacted Swifty Corporation, a dealer in machines. To obtain a new machine, Sheridan must pay $113,460 in addition to trading in its old machine.
Sheridan Skysong Concord Marigold Swifty
Machine cost $195,200 $146,400 $185,440 $195,200 $158,600
Accumulated depreciation 73,200 54,900 86,620 91,500 -0-
Fair value 112,240 84,180 112,240 115,900 225,700
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.
Sheridan Corporation
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Skysong Company
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2.
Sheridan Corporation
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3.
Sheridan Corporation
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Marigold Company
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4.
Sheridan Corporation
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Swifty Company
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(To record exchange of inventory)
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Entry field with incorrect answer
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(To record cost of inventory)
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Accounting
Authors: Charles T Horngren, Walter T Harrison
9th Edition
132959674, 978-0132569057
