Equipment that cost $394,900 and has accumulated depreciation of $310,300 is exchanged for equipment with a fair value of $160,000 and $40,000 cash is received. the exchange lacked commercial substance.

a) calculate the gain to be recognized from the exchange.

b) prepare the entry for the exchange. show a check of the amount recorded for the new equipment.

The correct answer for this question is "c. owner's capital, revenue, and expense accounts." The accounts listed on the trial balance with a credit balance include the owner's capital, the revenue, and the expense accounts. The trial balance  is a two-column schedule with all the debit balances listed in one column and all the credit balances listed in the other.