Vaughn Co. had a sheet metal cutter that cost $108,000 on January 5, 2016. This old cutter had an estimated life of ten years and a salvage value of $16,000. On April 3, 2021, the old cutter is exchanged for a new cutter with a fair value of $60,000. The exchange lacked commercial substance. Vaughn also received $15,000 cash. Assume that the last fiscal period ended on December 31, 2020, and that straight-line depreciation is used.

(b)

Prepare all entries that are necessary on April 3, 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Account Titles and Explanation	Debit	Credit
(To record depreciation.)
(To record exchange of machineries.)