EXTRA CREDIT: 5.4 points Magnolia Co. had a sheet metal cutt…
EXTRA CREDIT: 5.4 points Magnolia Co. had a sheet metal cutter that cost $120,000 on January 5, 2016. This old cutter had an estimated life of nine years and a salvage value of $18,000. On April 3, 2021, the old cutter is exchanged for a new cutter with a fair value of $63,000. The exchange lacked commercial substance. Magnolia also received $12,000 cash. Assume that the last fiscal period ended on December 31, 2020, and that straight-line depreciation is used. Calculate the total gain or loss. Round to the nearest dollar. of $ Prepare all entries that are necessary on April 3, 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round to the nearest dollar. If the line or entry is not necessary, enter “no entry” and input 0 for the amount.) Account Titles and Explanation Debit Credit To record depreciation expense To record exchange of machinery