What are the 1 and 2 Journal entries? Southern Company owns a building that it leases to others. The building’s fair value is $1,850,000 and its book value is $1,160,000 (original cost of $2,450,000 less accumulated depreciation of $1,290,000). Southern exchanges this for a building owned by the Eastern Company. The building’s book value on Eastern’s books is $1,310,000 (original cost of $2,050,000 less accumulated depreciation of $740,000). Eastern also gives Southern $185,000 to complete the exchange. The exchange has commercial substance for both companies.**Required:**Prepare the journal entries to record the exchange on the books of both Southern and Eastern. *(If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)*1. Record the exchange on the books of Southern Company. The exchange has commercial substance for both companies.2. Record the exchange on the books of Eastern Company. The exchange has commercial substance for both companies.

A journal entry is the act of keeping or making records of any transactions either economic or non-economic. Transactions are listed in an accounting journal that shows a company's debit and credit balances. Answer: (1.) Southern: Cash 185,000 Building - new 1,665,000 = 1,850,000 - 185,000 Accumulated depreciation- building 1,290,000 Building - old 2,450,000 Gain on exchange 690,000 (2.) Eastern: Building - new 1,850,000 Accumulated depreciation- building 740,000 Building - old 2,050,000 Gain on exchange 355,000 Cash 185,000