Problem 10-8 Sheffield Corporation wishes to exchange a machine used in its oper

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)

Explanation / Answer

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

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