Busytown Corporation, which manufactures shoes, hired a recent college graduate
ID: 2470266 • Letter: B
Question
Busytown Corporation, which manufactures shoes, hired a recent college graduate to work in its accounting department. On the first day of work, the accountant was assigned to total a batch of invoices with the use of an adding machine. Before long, the accountant, who had never before seen such a machine, managed to break the machine. Busytown Corporation gave the machine plus $808 to Dick Tracy Business Machine Company (dealer) in exchange for a new machine. Assume the following information about the machines. For each company, prepare the necessary journal entry to record the exchange. (The exchange has commercial substance.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)Explanation / Answer
JOURNAL OF BUSYTOWN :
__________________________________________________________________
ACCOUNT TITLE & DESCRIPTION DEBIT ($) CREDIT($)
JOURNAL OF DICK TRACY CO.
______________________________________________________________________________
ACCOUNT TITLE AND DESCRIPITON DEBIT ($) CREDIT ($)
CASH 808
OLD MACHINE 201
NEW MACHINE 641
GAIN ON EXCHANGE 368
( EXCHANGE OF NEW ASSET WITH OLD ASSET AND DIFFERENCE RECEIVED IN CASH)
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