Culver Corporation wishes to exchange a machine used in its operations. Culver h
ID: 2577883 • Letter: C
Question
Culver Corporation wishes to exchange a machine used in its operations. Culver has received the following offers from other companies in the industry.
In addition, Culver contacted Marin Corporation, a dealer in machines. To obtain a new machine, Culver must pay $137,640 in addition to trading in its old machine.
Culver
Larkspur
Cullumber
Riverbed
Marin
For each of the four independent situations, prepare the journal entries to record the exchange on the books of each company. (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.)
No.
Account Titles and Explanation
Debit
Credit
1.
Culver Corporation
Larkspur Company
2.
Culver Corporation
Cullumber Company
3.
Culver Corporation
Riverbed Company
4.
Culver Corporation
Marin Company
1. Larkspur Company offered to exchange a similar machine plus $34,040. (The exchange has commercial substance for both parties.) 2. Cullumber Company offered to exchange a similar machine. (The exchange lacks commercial substance for both parties.) 3. Riverbed Company offered to exchange a similar machine, but wanted $4,440 in addition to Culver’s machine. (The exchange has commercial substance for both parties.)Explanation / Answer
Culver
Larkspur
Cullumber
Riverbed
Marin
Machine cost
236800
177600
224960
236800
192400
Accumulated depreciation
88800
66600
105080
111000
0
Book Value
148000
111000
119880
125800
192400
Fair Value
136160
102120
136160
140600
273800
Loss/Gain
-11840
-8880
16280
14800
81400
S.no
Description
Debit
Credit
1
Culver
Cash
34040
Machine
102120
Accumulated depreciation
88800
Loss on Exchange of Machine
11840
Machine
236800
Larkspur
Machine
136160
Accumulated depreciation -machine
66600
Loss on exchange of machine
8880
Cash
34040
Machine
177600
S.no
Description
Debit
Credit
2
Culver
Machine
136160
Accumulated depreciation -machine
88800
Loss on exchange of Machine
11840
Machine
236800
Larkspur
Machine
119880
Accumulated depreciation -machine
105080
Machine
224960
S.no
Description
Debit
Credit
3
Culver
Machine
140600
Accumulated depreciation
88800
Loss on exchange of Machine
11840
Cash
4440
Machine
236800
Riverbed
Cash
4440
Machine
136160
Accumulated depreciation-machine
111000
Gain on exchange of Machine
14800
Machine
236800
S.no
Description
Debit
Credit
4
Culver
Machine
273800
Accumulated depreciation
88800
Loss on exchange of Machine
11840
Cash
137640
Machine
236800
Marin
Cash
137640
Machine
136160
Gain on Exchange of Machine
81400
Machine
192400
Culver
Larkspur
Cullumber
Riverbed
Marin
Machine cost
236800
177600
224960
236800
192400
Accumulated depreciation
88800
66600
105080
111000
0
Book Value
148000
111000
119880
125800
192400
Fair Value
136160
102120
136160
140600
273800
Loss/Gain
-11840
-8880
16280
14800
81400
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