Question

Exercise 10-19 (Part Level Submission) Ayayai Company exchanged equipment used in its manufacturing operations plus $4,200 in cash for similar equipment used in the operations of Pina Company. The following information pertains to the exchange. Equipment (cost) Accumulated depreciation Fair value of equipment Cash given up aya coPina Co 39,200 14,000 21,700 39,200 26,600 17,500 4,200 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 Debit Acceant Titles and Esplanstion Ayayai Companyt Credit Pina Company: Click if you would like to Show Work for this question: Open Show Work

Answer 1

Solution:

Journal entries

Account titles and explanation	Debit($)	Credit($)	Calculations
Ayayai company
Equipment A/c Dr	$16,800		($12,600 + $4,200)
Accumulated depreciation equipment A/c Dr	$26,600
Equipment A/c		$39,200
Cash A/c		$4,200
Pina Company
Equipment A/c Dr	$17,500
Accumulated depreciation equipment A/c Dr	$14,000
Cash A/c Dr	$4,200
Loss on disposal of equipment A/c Dr	$3,500
Equipment A/c		$39,200

Note:  

Book Value = $26,600 - $14,000

= $12,600