Question

Pina Corporation wishes to exchange a machine used in its operations. Pina has received the following offers from other companies in the industry. 1. Grouper Company offered to exchange a similar machine plus $28,060. (The exchange has commercial substance for both parties.) 2. Monty Company offered to exchange a similar machine. (The exchange lacks commercial substance for both parties.) 3. Flounder Company offered to exchange a similar machine, but wanted $3,660 in addition to Pina’s machine. (The exchange has commercial substance for both parties.) In addition, Pina contacted Culver Corporation, a dealer in machines. To obtain a new machine, Pina must pay $113,460 in addition to trading in its old machine. Pina Grouper Monty Flounder Culver 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.

Answer 1

Answer Page.noo Journal entries to record the exchange on the books of each company situation Credit $195200 Particular Debit Pina corporation Cash $28,060 Machinery $84180 Accumulated depreciation $73200 Loms on disposal of Machinery * 9760 Machinery Groupor company Machinery $119,240 Accumulated depreciation $54900 koos on disposal of machinery $ 4320 cash % Machinery Pina Corporation Machinery $110,240 Accumulated depreciation $ 73200 $ 9760 Lons on disposal of Machinery Machinery Monly company 98820 Machinery Aceumulated depreciation $86620 Machinery $28060 $146400 $195200 $185,440

Page No 3 $115,900 $73200 Püha corporation Machinery Accumulated depreciation Lors on disposal of machinery Cash Machinery $ 9760 $ 3660 $195200 Flounder company Machinery $110,840 Accumulated depreciation 4691500 cash $3660 Gain on disposal of machinery $12200 Machinery $195200 Ping corporation Machinery $225,700 Accumulated depreciation $ 73200 Loros on disposal of machinery $9760 cash $113460 Machinery $195200 Culver Corporation Cash $113460 uned machine inventory $112,240 sales $225700 cro record exchange of inventory) cost of goods sold $158600 Machinery inventory sto record cont of inventory) $158600