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Sage Corporation wishes to exchange a machine used in its operations. Sage has received the following offers from other companies in the industry.

1.

Pronghorn Company offered to exchange a similar machine plus $24,380. (The exchange has commercial substance for both parties.)

2.

Stellar Company offered to exchange a similar machine. (The exchange lacks commercial substance for both parties.)

3.

Pearl Company offered to exchange a similar machine, but wanted $3,180 in addition to Sage’s machine. (The exchange has commercial substance for both parties.)

In addition, Sage contacted Martinez Corporation, a dealer in machines. To obtain a new machine, Sage must pay $98,580 in addition to trading in its old machine.

Sage

Pronghorn

Stellar

Pearl

Martinez

Machine cost

$169,600

$127,200

$161,120

$169,600

$137,800

Accumulated depreciation

63,600

47,700

75,260

79,500

–0–

Fair value

97,520

73,140

97,520

100,700

196,100

For each of the four independent situations, prepare the journal entries to record the exchange on the books of each company.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

No.

Account Titles and Explanation

Debit

Credit

1.

Sage Corporation

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Pronghorn Company

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2.

Sage Corporation

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Stellar Company

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3.

Sage Corporation

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Pearl Company

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4.

Sage Corporation

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Martinez Company

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(To record exchange of inventory)

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(To record cost of inventory)

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