Holyfield Corporation wishes to exchange a machine used in its operations. Holyfield has received the following offers from other companies in the industry.
1. Dorsett Company offered to exchange a similar machine plus $48,484. (The exchange has commercial substance for both parties.)
2. Winston Company offered to exchange a similar machine. (The exchange lacks commercial substance for both parties.)
3. Liston Company offered to exchange a similar machine, but wanted $6,324 in addition to Holyfield's machine. (The exchange has commercial substance for both parties.)
In addition, Holyfield contacted Greeley Corporation, a dealer in machines. To obtain a new machine, Holyfield must pay $196,044 in addition to trading in its old machine.
Holyfield
Dorsett
Winston
Liston
Greeley
Machine cost $337,280 $252,960 $320,416 $337,280 $274,040
Accumulated depreciation 126,480 94,860 149,668 158,100 -0-
Fair value 193,936 145,452 193,936 200,260 389,980
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.)
Date
Account Titles and Explanation
Debit
Credit
1.Holyfield Corporation
Dorsett Company
2.Holyfield Corporation
Winston Company
3.Holyfield Corporation
Liston Company
4.Holyfield Corporation
Greeley Company
(To record sales)
(To record cost of goods sold)