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

Question

Flounder 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. Flounder Corporation gave the machine plus $469 to Culver Business Machine Company (dealer) in exchange for a new machine. Assume the following information about the machines.

Flounder Corp.
(Old Machine)

Culver Co.
(New Machine)

587

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.)

Flounder Corp.
(Old Machine)

Culver Co.
(New Machine)

Machine cost $400 $373 Accumulated depreciation 193 –0– Fair value 118

587

Explanation / Answer

Flounder Corp.: Machinery 587 Accumulated Depreciation-Machinery 193 Loss on Disposal of Machinery 89            Machinery 400             Cash 469 Culver Co.: Cash 469 Inventory 118 Cost of Goods Sold 373         Sales Revenue 587          Inventory 373

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