Smith and Jones each owns tracts of land. Because of the location of their current operations, each would prefer to have the other's land. Smith and Jones agree to exchange tracts. Jones pays Smith $36,000 based upon the following data.
Smith Land Jones Land
Original cost $270,000 $280,000
Appraised fair value 300,000 264,000 at date of exchange
Instructions
(a) Prepare the journal entry to record the exchange on Smith's books, assuming the transaction has commercial substance.
(b) Prepare the journal entry to record the exchange on Smith's books, assuming the transaction does not have commercial substance.
(c) Prepare the journal entry to record the exchange on Jones's books, assuming the transaction has commercial substance.
(d) Prepare the journal entry to record the exchange on Jones's books, assuming the transaction does not have commercial substance.