Question

Whispering Co. had a sheet metal cutter that cost $100,000 on January 5, 2021. This old cutter had an estimated life of ten years and a salvage value of $17,000. On April 3, 2026, the old cutter is exchanged for a new cutter with a fair value of $60,000. The exchange lacked commercial substance. Whispering also received $15,000 cash. Assume that the last fiscal period ended on December 31 , 2025 , and that straight-line depreciation is used. (b) θ Your answer is partially correct. Prepare all entries that are necessary on April 3, 2026. (Credit account titles are automatically indented when the 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. List all debit entries before credit entries. Record journal entries in the order presented in the problem.) List of Accounts Last saved 2 hours ago. Attempts: 1 of 5 used Saved work will be auto-submitted on the due date. Autosubmission can take up to 10 minutes.

Answer 1

The list of Accounts Last saved 2 hours ago is given below.

Step-by-step explanation:

On April 3, 2026, the necessary entries for Whispering Co.'s exchange of the old sheet metal cutter for a new cutter with a cash received are:

Debit New Cutter for $45,000 (Fair value of $60,000 minus $15,000 cash received)

Debit Accumulated Depreciation for $80,000 (Accumulated depreciation of old cutter)

Credit Accumulated Depreciation for $80,000 (Accumulated depreciation of old cutter)

Credit Old Cutter for $100,000 (Book value of old cutter)

Credit Gain on Exchange of Assets for $5,000 (Difference between the book value of the old cutter and the fair value of the new cutter)

Credit New Cutter for $60,000 (Fair value of new cutter)

Debit Cash for $15,000

Thus, list of accounts Last saved 2 hours ago is given above..