Southern company owns a building that it leases to others. the building’s fair value is $2,150,000 and its book value is $1,400,000 (original cost of $2,750,000 less accumulated depreciation of $1,350,000). southern exchanges this for a building owned by the eastern company. the building’s book value on eastern’s books is $1,550,000 (original cost of $2,350,000 less accumulated depreciation of $800,000). eastern also gives southern $215,000 to complete the exchange. the exchange has commercial substance for both companies.

required:
prepare the journal entries to record the exchange on the books of both southern and eastern. (if no entry is required for a transaction/event, select "no journal entry required" in the first account field.)

The owners of spokes bicycle shop worry that cash flow this winter may be insufficient to meet the current operating expenses. while they anticipate a surplus of cash inflow as warm weather approaches, they need funds now to meet the company's immediate obligations. the owners can best resolve cash flow concerns by obtaining financing.

Steele bicycle manufacturing company currently produces the handlebars used in manufacturing its bicycles, which are high-quality racing bikes with limited sales. steele produces and sells only 10,000 bikes each year. due to the low volume of activity, steele is unable to obtain the economies of scale that larger producers achieve. for example, steele could buy the handlebars for $31 each: they cost $34 each to make. the following is a detailed breakdown of current production costs: after seeing these figures, steele's president remarked that it would be foolish for the company to continue to produce the handlebars at $34 each when it can buy them for $31 each. calculate the total relevant cost. do you agree with the president's conclusion?

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