Homework lib Swifty Inc. has negotiated the purchase of a new piece of automatic equipment at a price of $11,360 plus trade-in, f. o.b. factory. Swifty Inc. paid $11,360 cash and traded in used equipment. The used equipment had originally cost $88,040; it had a book value of $59,640 and a secondhand fair value of $67,876, as indicated by recent transactions involving similar equipment. Freight and installation charges for the new equipment required a cash payment of $1,562. Required:
a. Prepare the general journal entry to record this transaction, assuming that the exchange has commercial substance.
b. Assuming the same facts as in (a) except that fair value information for the assets exchanged is not determinable. Prepare the general journal entry to record this transaction.