Metlock Corporation wishes to exchange a machine used in itsoperations. Metlock has received the following offers from othercompanies in the industry.
| 1. | | Bonita Company offered to exchange a similar machine plus$25,300. (The exchange has commercial substance for bothparties.) |
| 2. | | Windsor Company offered to exchange a similar machine. (Theexchange lacks commercial substance for both parties.) |
| 3. | | Sheridan Company offered to exchange a similar machine, butwanted $3,300 in addition to Metlock’s machine. (The exchange hascommercial substance for both parties.) |
In addition, Metlock contacted Skysong Corporation, a dealer inmachines. To obtain a new machine, Metlock must pay $102,300 inaddition to trading in its old machine.
| | Metlock | | Bonita | | Windsor | | Sheridan | | Skysong |
| Machine cost | | $176,000 | | $132,000 | | $167,200 | | $176,000 | | $143,000 |
| Accumulated depreciation | | 66,000 | | 49,500 | | 78,100 | | 82,500 | | –0– |
| Fair value | | 101,200 | | 75,900 | | 101,200 | | 104,500 | | 203,500 |
For each of the four independent situations, prepare the journalentries to record the exchange on the books of each company.(Credit account titles are automatically indented whenamount is entered. Do not indent manually. If no entry is required,select "No Entry" for the account titles and enter 0 for theamounts.)
No. | Account Titles and Explanation | Debit | Credit |
1. | Metlock Corporation | | |
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| Bonita Company | | |
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2. | Metlock Corporation | | |
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| Windsor Company | | |
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3. | Metlock Corporation | | |
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| Sheridan Company | | |
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4. | Metlock Corporation | | |
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| Skysong Company | | |
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| (To record exchange of inventory) | | |
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| (To record cost of inventory) | |
