Answer:
Journal Entries:
Marshall Construction:
Debit Disposal of Crane $140,000
Credit Credit Equipment $140,000
To transfer the cost of the old crane to disposal of crane account.
Debit Accumulated Depreciation $50,000
Credit Disposal of Crane $50,000
To transfer the accumulated depreciation to the disposal of crane account.
Debit Equipment $200,000
Credit Cash $118,000
Credit Disposal of Crane $82,000
To record the cost of the new crane, including the cash payment and exchange value of old crane.
Debit Loss on Disposal of Crane $8,000
Credit Disposal of Crane $8,000
To close the disposal of crane account with the recorded loss on disposal.
Brigham Manufacturing Co.
Debit Cash $118,0000
Debit Inventory $82,000
Credit Sales Revenue $200,000
To record the sale of goods for cash and exchange value.
Debit Cost of goods sold $165,000
Credit Inventory $165,000
To record the cost of goods sold.
Explanation:
a) Data and Calculations:
Marshall Const. Brigham Mfg. Co.
Fair value of old crane $82,000
Fair value of new crane $200,000
Cash paid 118,000
Cash received 118,000
Fair value of old crane 82,000
Total value exchanged $200,000 $200,000
Data and Analysis:
Marshall Construction:
Disposal of Crane $140,000 Credit Equipment $140,000
Accumulated Depreciation $50,000 Disposal of Crane $50,000
Equipment $200,000 Cash $118,000 Disposal of Crane $82,000
Loss on Disposal of Crane $8,000 Disposal of Crane $8,000
Brigham Manufacturing Co.
Cash $118,0000 Inventory $82,000 Sales Revenue $200,000
Cost of goods sold $165,000 Inventory $165,000
