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Grouper Company exchanged equipment used in its manufacturing operations plus $4,080 in cash for similar equipment used in the operations of Monty Company. The following information pertains to the exchange.

Grouper Co. Monty Co.
Equipment (cost) $38,080 $38,080
Accumulated depreciation 25,840 13,600
Fair value of equipment 17,000 21,080
Cash given up 4,080

Prepare the journal entries to record the exchange on the books of both companies. Assume that the exchange lacks commercial substance. (Cred

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Answer and Explanation:

Grouper Company

Dr Accumulated depreciation 25,840

Dr Equipment 16,680

Cr Equipment 38,080

Cr Cash 4,080

Monty Company

Dr Equipment 17000

Dr Accumulated depreciation 13600

Dr Cash 4080

Dr loss on disposal of equipm 3400

Cr Equipment 38,080

b)

Grouper Company

Dr Accumulated depreciation 25,840

Dr Equipment 21,080

Cr Equipment 38,080

Cr Gain on disposal of equipment 4760

Cr Cash 4,080

Monty Company

Dr Equipment 17000

Dr Accumulated depreciation 13600

Dr Cash 4080

Dr loss on disposal of equipm 3400

Cr Equipment 38,080

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