Two independent companies, Denver and Bristol, each own a warehouse, and they agree to exchange them. The following information for the two warehouses is available:

	Denver	Bristol
Cost	$90,000	$47,000
Accumulated depreciation	50,000	20,000
Fair value	37,000	35,000

Bristol agrees to pay Denver $2,000 to complete the exchange.

Required:

Assuming the transaction has commercial substance, prepare journal entries for Denver and Bristol to record the exchange.

CHART OF ACCOUNTS

Denver and Bristol

General Ledger

	ASSETS
111	Cash
121	Accounts Receivable
141	Inventory
152	Prepaid Insurance
181	Building (Warehouse (new))
182	Building (Warehouse (old))
185	Equipment
198	Accumulated Depreciation

	LIABILITIES
211	Accounts Payable
231	Salaries Payable
250	Unearned Revenue
261	Income Taxes Payable

	EQUITY
311	Common Stock
331	Retained Earnings

	REVENUE
411	Sales Revenue
882	Gain on Exchange

	EXPENSES
500	Cost of Goods Sold
511	Insurance Expense
512	Utilities Expense
521	Salaries Expense
532	Bad Debt Expense
540	Interest Expense
541	Depreciation Expense
559	Miscellaneous Expenses
892	Loss on Exchange
910	Income Tax Expense

Assume the exchange has commercial substance and occurred on April 1. Prepare journal entries for Denver and Bristol to record the exchange.

General Journal Instructions

PAGE 9PAGE 12

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2
3
4
5