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.)

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 is recorded)

Working notes:

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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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