Busytown Corporation, which manufactures shoes, hired a recent college graduate

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 $373 to Dick Tracy Business Machine Company (dealer) in exchange for a new machine. Assume the following information about the machines.

Busytown Corp.
(Old Machine)

Dick Tracy Co.
(New Machine)

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.)

Account Titles and Explanation

Debit

Credit

Busytown Corporation

Dick Tracy Business Machine Company

Busytown Corp.
(Old Machine)

Dick Tracy Co.
(New Machine)

Machine cost $318 $296 Accumulated depreciation 154 –0– Fair value 93 466

Explanation / Answer

Debit Machine 466 373+93 Debit Accumulated Depreciation 154 Debit Loss on disposal of machine 71 318-154-93 Credit Machine 318 Credit Cash 373 Debit cash 373 Debit Inventory 93 Debit cost of goods sold 296 Credit sales 466 Credit Inventory 296

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.