Prepare the journal entries to record the exchange on books

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Question - Whispering Company exchanged equipment used in its manufacturing operations plus $3,180 in cash for similar equipment used in the operations of Metlock Company. The following information pertains to the exchange.

 

Whispering Co.

Metlock Co.

Equipment (cost)

$29,680

$29,680

Accumulated depreciation

20,140

10,600

Fair value of equipment

13,250

16,430

Cash given up

3,180

 

Required -

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

B. Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange has commercial substance.

Reference no: EM133088064

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