Exercise 10-19 Larkspur Company exchanged equipment used in its manufacturing op

Question

Exercise 10-19 Larkspur Company exchanged equipment used in its manufacturing operations plus $3,060 in cash for similar equipmant used in the operations of Cullumber Company. The following information pertains to the exchange. Larkspur Co.Cullumber Co. 528,560 10,200 5,810 Equipment (cost) $28,560 19,380 12,750 3,060 Fair value of equipment Cash given up 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 automaticaly indented when amount is entered. Do not indent manually. If no en is required, select "No Entry for the account titles and enter 0 for the amounts.) Account Titles and Explanation DebitCredit Cullumber Company: Prepare the journal entries to record the exchange on the books of both companies. Assume that 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 O for the amounts.) Account Tides and Explanation Debit Credit Question Attempts: 0 of 3 used

Explanation / Answer

Part 1

Journal entries in the books of Larkpur Company

1. Dr. Equipment (New) a/c................. $ 12240

Cr. Equipment (Old) a/c...................$ 9180

Cr. Cash a/c....................................$ 3060

Journal Entries in the Books of Cullumber Co.

1. Dr. Equipment (New) a/c.................$15300

Dr. Cash a/c.....................................$3060

Cr. Equipment (Old) a/c...................$18360

Part 2

Journal entries in the books of Larkpur Company

Dr. Equipment (New) a/c....................$15810

Cr. Equipment (Old) a/c.....................$9180

Cr. Cash a/c.......................................$3060

Cr. Profit on Sale of Equipment a/c...$3570

Journal Entries in the Books of Cullumber Co.

Dr. Equipment (New) a/c...................$12750

Dr. Loss on Sale of Equipment a/c....$5610

Cr.Equipment (Old) a/c......................$18360

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