(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. |
|
|
Machine cost |
$290 |
$270 |
|
Accumulated depreciation |
140 |
–0– |
|
Fair value |
85 |
405 |
Instructions
For each company, prepare the necessary journal entry to record the exchange.