Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange lacks commercialsubstance. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entryis required, select "No Entry" for the account titles and enter 0 for the amounts.)Account Titles and ExplanationDebitCreditGrouper Company:Monty Company: Grouper Company exchanged equipment used in its manufacturing operations plus $4,140 in cash for similar equipment used in theoperations of Monty Company. The following information pertains to the exchange.GrouperCo.Monty Co.Equipment (cost)$38,640$38,640Accumulated depreciation26,22013,800Fair value of equipment17,25021,390Cash given up4,140

Grouper Co. Monty Co. Fair Value of Old Equipment 17250 21390 Less: Book Value of Equipment (38640-26220) = 12420 (38640-13800) = 24840 Gain (or Loss) on Exchange $4830 ($3450)Company Account Title and Explanation Debit Credit Grouper Co. Equipment (12420+ 4140) 16560 Accumulated Depreciation 26220 Equipment 38640 Cash 4140 (To record the equipment exchanged) Monty Co. Equipment (New) 17250 Accumulated Depreciation 13800 Cash 4140 Loss on exchange 3450 Equipment(Old) 38640 (To record the equipment exchanged)

Business

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Grouper Company exchanged equipment used in its manufacturing operations plus $4,140 in cash for similar equipment used in the operations of Monty Company. The following information pertains to the exchange. Grouper Monty Co. Co. Equipment (cost) $38,640 $38,640 Accumulated depreciation 26,220 13,800 Fair value of equipment 17,250 21,390 Cash given up 4,140

Grouper Company exchanged equipment used in its manufacturing operations plus $4,140 in cash for similar equipment used in the operations of Monty Company. The following information pertains to the exchange. Grouper Monty Co. Co. Equipment (cost) $38,640 $38,640 Accumulated depreciation 26,220 13,800 Fair value of equipment 17,250 21,390 Cash given up 4,140

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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