Prepare journal entries for the following.

1. 1. You purchased new equipment (equipment A) which had market value of $25,000 and exchanged Old equipment (equipment B) which cost $40,000, had book value of $20,000 and market value of $24,000 plus you paid $1,500 in cash. This transaction LACKS Commercial substance.

2. 2. You bought new Equipment (Equipment C) which had market value of $50,000 and exchanged Old equipment (equipment D) which cost $80,000, had book value of $70,000, and market value of $65,000 plus you received $18,000 in cash. This transaction Has commercial substance.

3. 3. You bought equipment and paid $11,000 in cash, plus $200 of freight, and $600 for installation.

4. 4. You bought an equipment and paid for it with 4,000 shares of your $10 par common stock which has book value of $27 per share and a market value of $31 per share. Prepare journal entry for this transaction.

5. 5. You bought equipment and signed a 7% note in which you agreed to make 36 monthly payment of $2,860 at the end of each month. Record the purchase and the payment at the end of each month. Prepare journal entry for this transaction.

Answer rating: 100% (QA)

Journal Entry for Equipment Exchange Lacks Commercial Substance Date Account Debit Credit Equipment ... View the full answer