Southern company owns a building that it leases to others. the building’s fair value is $1,750,000 and its book value is $1,080,000 (original cost of $2,350,000 less accumulated depreciation of $1,270,000). southern exchanges this for a building owned by the eastern company. the building’s book value on eastern’s books is $1,230,000 (original cost of $1,950,000 less accumulated depreciation of $720,000). eastern also gives southern $175,000 to complete the exchange. the exchange has commercial substance for both companies.
required:
a. prepare the journal entries to record the exchange on the books of both southern and eastern. (if no entry is required for an event, select "no journal entry required" in the first account field.)

Variable rate cd’s = $90 treasury bills = $150 discount loans = $20 treasury notes = $100 fixed rate cds = $160 money market deposit accts. = $140 savings deposits = $90 fed funds borrowing = $40 variable rate mortgage loans $140 demand deposits = $40 primary reserves = $50 fixed rate loans = $210 fed funds lending = $50 equity capital = $120 a. develop a balance sheet from the above data. be sure to divide your balance sheet into rate-sensitive assets and liabilities as we did in class and in the examples. b. perform a standard gap analysis and a duration analysis using the above data if you have a 1.15% decrease in interest rates and an average duration of assets of 5.4 years and an average duration of liabilities of 3.8 years. c. indicate if this bank will remain solvent after the valuation changes. if so, indicate the new level of equity capital after the valuation changes. if not, indicate the amount of the shortage in equity capital.