Question

During the current year, Bridgeport Construction Ltd. traded in two relatively new small cranes (cranes no. 6RT and S79) for a larger crane that Bridgeport expects will be more useful for the particular contracts that the company has to fulfill over the next couple of years. The new crane is acquired from Sarasota Manufacturing Inc., which has agreed to take the smaller equipment as trade-ins and also pay $13,000 cash to Bridgeport. The new crane cost Sarasota $173,000 to manufacture and is classified as inventory. The following information is available:

----------------------------------------------------------------------------------Bridgeport Const.----------------------------------------------------Sarasota Mfg
Cost of crane #6RT		$122,000
Cost of crane #S79		117,500
Accumulated depreciation, #6RT		12,000
Accumulated depreciation, #S79		15,000
Fair value, #6RT		125,000
Fair value, #S79		86,000
Fair value of new crane				$198,000
Cash paid				13,000
Cash received Assume that this exchange has commercial substance. Prepare the journal entries on the books of (1) Bridgeport Construction Ltd. and (2) Sarasota Manufacturing Inc. Sarasota uses a perpetual inventory system. (Credit account titles are automatically indented when the 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.) Bridgeport Construction Account Titles and Explanation Debit Credit ---------------------------------- ----------------------------------- ---------------------------------- -------------------------------- -------------------------------- ------------------------------ ------------------------------- Sarasota Manufacturing Account Titles and Explanation Debit Credit _______________________ _________________________ _________________________- (To record equipment purchase) _________________________ _________________________ (To record the cost) Assume that this exchange lacks commercial substance. Prepare the journal entries on the books of (1) Bridgeport Construction and (2) Sarasota Manufacturing. Sarasota uses a perpetual inventory system. (Credit account titles are automatically indented when the 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.) Bridgeport Construction Account Titles and Explanation Debit Credit _________________________ __________________________ ___________________________ ________________________- __________________________ ___________________________ ___________________________ Sarasota Manufacturing Account Titles and Explanation Debit Credit ______________________ _______________________ ________________________

Answer 1