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Question 9

Skysong Corporation wishes to exchange a machine used in its operations. Skysong has received the following offers from other companies in the industry.

1.		Concord Company offered to exchange a similar machine plus $34,040. (The exchange has commercial substance for both parties.)
2.		Marigold Company offered to exchange a similar machine. (The exchange lacks commercial substance for both parties.)
3.		Swifty Company offered to exchange a similar machine but wanted $4,440 in addition to Skysongs machine. (The exchange has commercial substance for both parties.)

In addition, Skysong contacted Nash Corporation, a dealer in machines. To obtain a new machine, Skysong must pay $137,640 in addition to trading in its old machine.

		Skysong		Concord		Marigold		Swifty		Nash
Machine cost		$236,800		$177,600		$224,960		$236,800		$192,400
Accumulated depreciation		88,800		66,600		105,080		111,000		0
Fair value		136,160		102,120		136,160		140,600		273,800

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.	Skysong Corporation
	Concord Company
2.	Skysong Corporation
	Marigold Company
3.	Skysong Corporation
	Swifty Company
4.	Skysong Corporation
	Nash Company
	(To record exchange of inventory)
	(To record cost of inventory)

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