Skysong Corporation, which manufactures shoes, hired a recent college graduate to work in its accounting department....

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Skysong Corporation, which manufactures shoes, hired a recent college graduate to work in its accounting department....

Skysong Corporation, which manufactures shoes, hired a recent college graduate to work in its accounting department. On the first day of work, the accountant was assigned to total a batch of invoices with the use of an adding machine. Before long, the accountant, who had never before seen such a machine, managed to break the machine. Skysong Corporation gave the machine plus $360 to Concord Business Machine Company (dealer) in exchange for a new machine. Assume the following information about the machines.

	Skysong Corp. (Old Machine)	Concord Co. (New Machine)
Machine cost	$307	$286
Accumulated depreciation	148	–0–
Fair value	91	451

For each company, prepare the necessary journal entry to record the exchange. (The exchange has commercial substance.) (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.)

Account Titles and Explanation	Debit	Credit
Skysong Corporation





Concord Business Machine Company

business accounting

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Answer 1

Answer #1

Skysong corp.
Exchange has commercial substance

equipment (new) ( FV 91 + cash 360 )	451
Accumulated dep.	148
Loss on exchange	68		(Balancing figure )
euipment (old)		307
Cash		360

Concord co.
Exchange has commercial substance
Inventory	91
Cash	360
COGS	286
Sales revenue		451
Inventory		286

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Answer 2

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