Cannondale Company purchased an electric was melter on April 30, 2017, by trading in its old gas model and paying the balance in cash. Prepare the journal entries necessary to record this exchange assuming that the exchange (a) has commercial substance, and (bA) lacks commercial substance.
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Cannondale Company purchased an electric was melter on April 30, 2017, by trading in its old gas model and paying the balance in cash. Prepare the
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- A company acquires $45,000 in new web servers. In exchange, the company trades in old web servers along with a cash payment. The old servers originally cost $30,000 and had accumulated depreciation of $23,400 at the time of the trade. Prepare entries to record the trade under two different assumptions where (a) the exchange has commercial substance and the old servers have a trade-in allowance of $3,000 and (b) the exchange has commercial substance and the old servers have a trade-in allowance of $7,000.On September 3, 2018, the Robers Company exchanged equipment with Phifer Corporation. The facts of theexchange are as follows:Robers’ Asset Phifer’s AssetOriginal cost $120,000 $140,000Accumulated depreciation 55,000 63,000Fair value 75,000 70,000To equalize the exchange, Phifer paid Robers $5,000 in cash.Required:Record the exchange for both Robers and Phifer. The exchange has commercial substance for both companies.Carolina Co. purchased a machine at a cost of $780,000 on January 1, 2016. On January 1, 2021, the balance of the Accumulated depreciation account on this old machine is $320,000; On that day, Carolina exchanged this old machine for a new machine (the transaction has commercial substance) which has a market value of $432,000. In addition, Carolina received $48,000 cash in the exchange. Instructions (1) Prepare all the necessary journal entries for Carolina Co. on January 1, 2021. (2) Now, assume that the transaction lacks commercial substance and prepare all the necessary journal entries on January 1, 2021.
- Champion Industries exchanged a dust-scrubbing piece of equipment for another version of the same type of equipment and received $12,000 cash. The old dust scrubber cost $76,200 and had a net book value of $44,000. The new dust scrubber had a fair market value of $60,000. Prepare the journal entry to record the exchange, assuming that the exchange a) has commercial substance, and b) lacks commercial substance.(Nonmonetary Exchange) Cannondale Company purchased an electric wax melter on April 30, 2017, by trading in its old gas model and paying the balance in cash. The following data relate to the purchase. List price of new melter $15,800 Cash paid 10,000 Cost of old melter (5-year life, $700 salvage value) 11,200 Accumulated depreciation—old melter (straight-line) 6,300 Secondhand fair value of old melter 5,200 InstructionsPrepare the journal entry(ies) necessary to record this exchange, assuming that the exchange (a) has commercial substance, and (b) lacks commercial substance. Cannondale’s fiscal year ends on December 31, and depreciation has been recorded through December 31, 2016.Barra Inc. sells machinery to GM Corp. under an arrangement where GM prepays for the equipment on January 1, 2022 and the equipment is delivered on June 30, 2022. When delivery of the machinery occurs, Barra will record which of the following: Increase to inventory. Increase to cash. Increase to unearned revenue. None of the answers are correct. Increase to sales revenue.
- Flint Company exchanged equipment used in its manufacturing operations plus $3,360 in cash for similar equipment used in the operations of Buffalo Company. The following information pertains to the exchange. Flint Co. Buffalo Co. Equipment (cost) $31,360 $31,360 Accumulated depreciation 21,280 11,200 Fair value of equipment 14,000 17,360 Cash given up 3,360 Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange lacks commercial substance. (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.) Account Titles and Explanation Debit Credit Flint Company: Buffalo Company:…Jolas Realty Corp. in the course of the trade sells real property. During the month of January 2007 had the following data per sales document (VAT included): Cash sales P 560,000 Sale on deferred payment basis (initial payments exceed 25% of the selling price) 336,000 The real property sold for cash had a zonal value of P600,000 (excluding VAT) and the property sold under deferred payment basis had a fair market value of P200,000 (excluding VAT) How much is the output VAT on the sale of real property?Ward Company purchased an electric press on June 30, 2020, by trading in its old gas model and paying the balance in cash. The following data relate to the purchase: List price of new press $24,800 Cash paid 12,000 Cost of old press (10-year life, $1,000 residual value): 35,000 Accumulated depreciation—old press (straight-line): 27,200 Second-hand market value of old press 6,600 Prepare the journal entry(ies) necessary to record this exchange, assuming that the exchange (a) has commercial substance, and (b) lacks commercial substance. Ward’s fiscal year ends on December 31, and depreciation has been recorded through December 31, 2019.
- Metro Inc. trades its used machine for a new model at Denver Co. The used machine has a book value of $42,000 (cost $64,000) and a fair value of $50,000. Metro receives $5,000 cash from Denver. A) Prepare the necessary journal entry by Metro to record this exchange. Assume the exchange has no commercial substance. B) Prepare the necessary journal entry by Metro to record this exchange. Assume the exchange has commercial substance.On January 1, 2017, Oldham Company sold goods to Windall Company in exchange for a 3-year, non-interest-bearing note with a face value of $30,000. If Oldham entered into a separate financing transaction with Windall, an appropriate interest rate would be 10%; therefore, the transaction price would be $22,540. Which of the following statements is true about the journal entry that records the transaction when Oldham delivers the goods to Windall on January 1, 2017? Debit Discount on Note Receivable $7,460 Credit Sales Revenue $22,540 Credit Interest Revenue $7,460 Debit Note Receivable for $22,540On September 3, 2024, the Robers Company exchanged equipment with Phifer Corporation. The facts of the exchange are as follows: Robers’ Asset Phifer’s Asset Original cost $ 215,000 $ 235,000 Accumulated depreciation 131,000 139,000 Fair value 103,500 79,500 To equalize the exchange, Phifer paid Robers $24,000 in cash. Required: Record the exchange for both Robers and Phifer. The exchange has commercial substance for both companies. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.