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15 February, 19:16

Kerry, Inc., exchanged land and cash of $7,800 for equipment. The land had a book value of $53,000 and a fair value of $57,800. Required: Prepare the journal entry to record the exchange. Assume the exchange has commercial substance. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

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  1. 15 February, 19:39
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    The journal entry is shown below.

    Explanation:

    According to the scenario, the journal entry for the given data are as follows:

    Journal entry

    Equipment A/c. Dr $65,600

    To Cash A/c $7,800

    To Land A/c $53,000

    To Profit A/c $4,800

    (Being exchange of equipment i recorded)

    Computation

    Equipment = Fair value of land + Cash = $57,800 + 7,800 = $65,600

    Profit = Fair value - Book value = $57,800 - $53,000 = $4,800
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