Question

Problem 10-8 Sheffield Corporation wishes to exchange a machine used in its operations. Sheffield has received the following offers from other companies in the industry. 1. Tamarisk Company offered to exchange a similar machine plus $33,580. (The exchange has commercial substance for both parties.) 2. Vaughn Company offered to exchange a similar machine. (The exchange lacks commercial substance for both parties.) 3. Bramble Company offered to exchange a similar machine, but wanted $4,380 in addition to Sheffield’s machine. (The exchange has commercial substance for both parties.) In addition, Sheffield contacted Sunland Corporation, a dealer in machines. To obtain a new machine, Sheffield must pay $135,780 in addition to trading in its old machine. Sheffield Tamarisk Vaughn Bramble Sunland Machine cost $233,600 $175,200 $221,920 $233,600 $189,800 Accumulated depreciation 87,600 65,700 103,660 109,500 –0– Fair value 134,320 100,740 134,320 138,700 270,100 For each of the four independent situations, prepare the journal entries to record the exchange on the books of each company. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) No. Account Titles and Explanation Debit Credit 1. Sheffield Corporation Tamarisk Company 2. Sheffield Corporation Vaughn Company 3. Sheffield Corporation Bramble Company 4. Sheffield Corporation Sunland Company (To record exchange of inventory)

Answer 1

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you.
	Sheffield	Tamarisk	Vaughn	Bramble	Sunland
Cost	233600	175200	221920	233600	189800
Acc Dep	87600	65700	103660	109500	0
Fair Value	134320	100740	134320	138700	270100
1st Case:
		Debit	Credit
	Cash	33580
	Tamarisk Machine	100740		Fair Value
	Accumulated Depreciation	87600
	Loss on Exchange	11680		Balancing
	Sheffiled Old Machine		233600
2nd Case:		Debit	Credit
	Vaughn Machine	134320
	Loss on Exchange	11680
	Accumulated Depreciation	87600
	Sheffiled Old Machine		233600
3rd Case:		Debit	Credit
	Bramble Machine	138700		Fair Value
	Accumulated Depreciation	87600
	Loss on Exchange	11680		Balancing
	Cash		4380
	Sheffiled Old Machine		233600
4th Case:		Debit	Credit
	Sunland Machine	270100		Fair Value
	Accumulated Depreciation	87600
	Loss on Exchange	11680		Balancing
	Cash		135780
	Sheffiled Old Machine		233600