Question

Riverbed Company exchanged equipment used in its manufacturing operations plus $4,200 in cash for similar equipment used in the operations of Marin Company. The following information pertains to the exchange.

		Riverbed Co.			Marin Co.
Equipment (cost)		$39,200			$39,200
Accumulated depreciation		26,600			14,000
Fair value of equipment		17,500			21,700
Cash given up		4,200

Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange lacks 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
Riverbed Company:
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount
Marin Company:
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount

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List of Accounts

  

  

Prepare the journal entries to record the exchange on the books of both companies. Assume that 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
Riverbed Company
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount
Marin Company
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount

Answer 1

SOLUTION

1.

S.No.	Accounts titles and Explanation	Debit ($)	Credit ($)
	Riverbed Company
1.	Equipment	16,800
	Accumulated depreciation	26,600
	Equipment		39,200
	Cash		4,200
	Marin Company
2.	Equipment (new)	17,500
	Accumulated depreciation	14,000
	Cash	4,200
	Loss on exchange	3,500
	Equipment (Old)		39,200

2.

S.No.	Accounts titles and Explanation	Debit ($)	Credit ($)
	Riverbed Company
1.	Equipment (17,500+4,200)	21,700
	Accumulated depreciation	26,600
	Equipment		39,200
	Cash		4,200
	Gain on exchange		4,900
	Marin Company
2.	Equipment (new)	17,500
	Accumulated depreciation	14,000
	Cash	4,200
	Loss on exchange	3,500
	Equipment (Old)		39,200