Smith and Jones each own tracts of land. Because of the location of their current operations, each would prefer to have the others land. Smith and Jones agree to exchange tracts.

Jones pays Smith $36,000 based upon the following data.

Smith Land Jones Land

Original Cost $270,000 $280,000

Appraised fair value at date of exchange $300,000 $264,000

Instructions

(a) Prepare the journal entry to record the exchange on Smiths books, assuming the transaction has commercial substance.

(b) Prepare the journal entry to record the exchange on Smiths books, assuming the transaction does not have commercial substance.

(c) Prepare the journal entry to record the exchange on Joness books, assuming the transaction has commercial substance.

(d) Prepare the journal entry to record the exchange on Joness books, assuming the transaction does not have commercial substance