Question

Nash Corporation wishes to exchange a machine used in its operations. Nash has received the following offers from other companies in the industry. 1. Crane Company offered to exchange a similar machine plus $29,900. (The exchange has commercial substance for both parties.) 2. Cheyenne Company offered to exchange a similar machine. (The exchange lacks commercial substance for both parties.) 3. Ayayai Company offered to exchange a similar machine, but wanted $3,900 in addition to Nash’s machine. (The exchange has commercial substance for both parties.) In addition, Nash contacted Pina Corporation, a dealer in machines. To obtain a new machine, Nash must pay $120,900 in addition to trading in its old machine. Nash Crane Cheyenne Ayayai Pina Machine cost $208,000 $156,000 $197,600 $208,000 $169,000 Accumulated depreciation 78,000 58,500 92,300 97,500 –0– Fair value 119,600 89,700 119,600 123,500 240,500 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. Nash Corporation Cash 29900 Machinery 89700 Accumulated Depreciation-Machinery 78000 Gain on Disposal of Machinery 10400 Machinery 208000 Crane Company Machinery 119600 Accumulated Depreciation-Machinery 58500 Loss on Disposal of Machinery 7800 Cash 29900 Machinery 156000 2. Nash Corporation Machinery 119600 Accumulated Depreciation-Machinery 92300 Cheyenne Company 3. Nash Corporation Ayayai Company 4. Nash Corporation Pina Company (To record exchange of inventory) (To record cost of inventory)

Answer 1