Would please like help with solving this problem Algo 10-09 Intermediate II Problem:

Two independent companies, Denver and Bristol, each own a warehouse, and they agree to an exchange in which no cash changes hands. The following information for the two warehouses is available:

	Denver	Bristol
Cost	$80,000	$31,500
Accumulated depreciation	60,000	25,000
Fair value	17,000	17,000

Required:

1.	Assuming the exchange has commercial substance, prepare journal entries for Denver and Bristol to record the exchange.
2.	Assuming the exchange does not have commercial substance, prepare journal entries for Denver and Bristol to record the exchange.
3.	Next LevelWhat is the justification of accounting for the exchange differently when the exchange has commercial substance versus when it does not?

CHART OF ACCOUNTS

GENERAL LEDGER

	ASSETS		REVENUE
111	Cash	411	Sales Revenue
121	Accounts Receivable	882	Gain on Exchange
141	Inventory		EXPENSES
152	Prepaid Insurance	500	Cost of Goods Sold
181	Building	511	Insurance Expense
185	Equipment	512	Utilities Expense
198	Acc. Depreciation	521	Salaries Expense
	LIABILITIES	532	Bad Debt Expense
211	Accts Payable	540	Interest Expense
231	Salaries Payable	541	Depreciation Expense
250	Unearned Income	559	Misc. Expense
261	Income Taxes Payable	892	Loss on Exchange
	EQUITY	910	Income Tax Expense
311	Common Stock
331	Retained Earnings

Assume the exchange has commercial substance and occurred on April 1. Prepare journal entries for Denver and Bristol to record the exchange. Record Denver's transaction on page 9 and Bristol's on page 12.

DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2
3
4

Assume the exchange does not have commercial substance and occurred on April 1. Prepare journal entries for Denver and Bristol to record the exchange. Record Denver's transaction on page 9 and Bristol's on page 12.

DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2
3
4