Purchased office equipment, $ 115 comma 000$115,000. Paid $ 73 comma 000$73,000

Question

Purchased office equipment,

$ 115 comma 000$115,000.

Paid

$ 73 comma 000$73,000

cash and financed the remainder with a note payable.

Apr. 1

Acquired land and communication equipment in a lump-sum purchase. Total cost was

$ 410 comma 000$410,000

paid in cash. An independent appraisal valued the land at

$ 322 comma 875$322,875

and the communication equipment at

$ 107 comma 625$107,625.

Sep. 1

Sold a building that cost

$ 555 comma 000$555,000

(accumulated depreciation of

$ 255 comma 000$255,000

through December 31 of the preceding year).

GrettaGretta

ChungChung

Associates received

$ 340 comma 000$340,000

cash from the sale of the building. Depreciation is computed on a straight-line basis. The building has a 40-year useful life and a residual value of

$ 75 comma 000$75,000.

Dec. 31

Recorded depreciation as follows:

Communication equipment is depreciated by the straight-line method over a five-year life with zero residual value.

Office equipment is depreciated using the double-declining-balance method over five years with a

$ 4 comma 000$4,000

residual value.

ChungChung Associates surveys American eating habits. The company's accounts include Land, Buildings, Office Equipment, and Communication Equipment, with a separate Accumulated Depreciation account for each depreciable asset. During 20182018, GrettaGretta ChungChung Associates completed the following transactions:

Explanation / Answer

Date General Journal Debit Credit 1-Jan Office Equipment 115000 Cash 73000 Note Payable 115000-73000 42000 To record purchase of office equipment with cash and note payable. 1-Apr Land 410000/(322,875+107,625)*322,875 307500 Communication Equipment 410000/(322,875+107,625)*107,625 102500 Cash 410,000 To record purchase of land and communication equipment with cash. 1-Sep Depreciation Expense—Building (555,000-75,000)/40*8/12 8000 Accumulated Depreciation—Building 8000 To record depreciation on building. Cash 340,000 Accumulated Depreciation—Building 255,000+8000 263000 Building 555,000 Gain on disposal 48,000 To record sale of building 31-Dec Depreciation Expense—Communication Equipment (102500/5)*9/12 15375 Accumulated Depreciation—Communication Equipment 15375 To record depreciation on communication equipment.

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