Prepare the journal entries to record the exchange on books

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Question - Pharoah Company exchanged equipment used in its manufacturing operations plus $3,660 in cash for similar equipment used in the operations of Novak Company. The following information pertains to the exchange.

 

Pharoah Co.

Novak Co.

Equipment (cost)

$34,160

$34,160

Accumulated depreciation

23,180

12,200

Fair value of equipment

15,250

18,910

Cash given up

3,660

-

Required - Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange lacks commercial substance.

Reference no: EM132522453

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