Stars tdaded a whirpool to the rangers for a smaller whirpool on january 2, 2002: Stars:...

Stars tdaded a whirpool to the rangers for a smaller whirpool on january 2, 2002:

Stars:

- Cost of whirpool and related ACC-Depreciation $ 850,000 (cost) $640,000

- Cash received from rangers $37,000

- FV of star's whirpool $270,000

Ranger's

-Cost of whirpool & ACC-Depreciation $930,000 (cost) & 630,000$

- Cash paid to Stars $37,000

- FV of rangers whirpool $233,000

1. my question is, what would be the journal entries to record the exchange of these assets for both companies. I want to see if my J.Entries are correct. Thank you!

Expert Solution

Sl. No.	Particulars	Stars	Rangers
A	Cost of Whirlpool	850000	930000
B	Depriciation on the abovee	640000	630000
C	Net Value of whirlpool on date of sale	210000	300000
D	Cash Received	37000
E	FV of Asset	270000	233000

F	Thus, net amount received in cash or kind by stars in exchange of whirlpool = 233000 + 37000 =	270000

G	Thus, net profit to stars on exchange = F-C	60000

	*Journal Entry in books of Stars would be:*

	Cash A/c …… Dr	37000
	Ranger's Whirlpool A/c …. Dr	233000
	To Star's Whirlpool A/c		210000
	To Profit & Loss A/c		60000

H	Net amount paid in cash or kind by Rangers in exchange of whirlpool = 300000 + 37000 =		337000

I	Thus, net profit/(LOSS) to Rangers on exchange	H-E	-67000

	*Journal Entry in books of Stars would be:*

	Star's Whirlpool A/c …. Dr	270000
	Profit & Loss A/c…. Dr	67000
	To Rangers's Whirlpool A/c		300000
	To Cash A/c		37000

ekkarill92 answered 2 years ago

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