Nonmonetary Exchange Alatorre 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. Alatorre Corporation gave the machine plus $320 to Mills Business Machine Company (dealer) in exchange for a new machine. Assume the following information about the machines.

                                                Alatorre Corp.                             Mills Co.

                                                (Old Machine)                         (New Machine)

Machine cost                                 $290                                        $270

Accumulated depreciation            140                                          –0–

Fair value                                            85                                          405

For each company, prepare the necessary journal entry to record the exchange. (The exchange has commercial substance.)