Prepare journal entries on books of bridgeport construction

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Reference no: EM132490996

Point 1: During the current year, Bridgeport Construction Ltd. traded in two relatively new small cranes (cranes no. 6RT and S79) for a larger crane that Bridgeport expects will be more useful for the particular contracts that the company has to fulfill over the next couple of years. The new crane is acquired from Sarasota Manufacturing Inc., which has agreed to take the smaller equipment as trade-ins and also pay $13,000 cash to Bridgeport. The new crane cost Sarasota $173,000 to manufacture and is classified as inventory. The following information is available:

 

Bridgeport

Sarasota

Cost of crane #6RT

$122,000

 

Cost of crane #S79

117,500

 

Accumulated depreciation, #6RT

12,000

 

Accumulated depreciation, #579

15,000

 

Fair value, #6RT

125,000

 

Fair value, #S79

86,000

 

Fair value of new crane

 

$198,000

Cash paid

 

13,000

Cash received

13,000

 

Question 1: Assume that this exchange has commercial substance. Prepare the journal entries on the books of Bridgeport Construction and Sarasota Manufacturing. Sarasota uses a perpetual inventory system.

Reference no: EM132490996

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