At December 31, 2017, Grand Company reported the following as plant assets. Duri

Question

At December 31, 2017, Grand Company reported the following as plant assets.

During 2018, the following selected cash transactions occurred.

Retired equipment that cost $490,000 when purchased on December 31, 2008. No salvage value was received.

Journalize the above transactions. The company uses straight-line depreciation for buildings and equipment. The buildings are estimated to have a 50-year life and no salvage value. The equipment is estimated to have a 10-year useful life and no salvage value. Update depreciation on assets disposed of at the time of sale or retirement. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Land $ 4,360,000 Buildings $28,130,000 Less: Accumulated depreciation—buildings 12,490,000 15,640,000 Equipment 48,640,000 Less: Accumulated depreciation—equipment 5,290,000 43,350,000     Total plant assets $63,350,000 Date Account Titles and Explanation Debit Credit Apr. 1 land 2,050,000 Cash 2,050,000 May 1 Depreciation Expense Accumulated Depreciation-Buildings (To record depreciation) May 1 (To record sale of equipment)

Explanation / Answer

a)

Workings:

b)

Workings:

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Date Account Name Debit Credit 1-Apr Land $        2,050,000 Cash $        2,050,000 (To Record Purchase of Land) 1-May Depreciation Expenses $              34,000 Accumulated Depreciation- Equipment $              34,000 (To Record Depreciation) 1-May Cash $            612,000 Accumulated Depreciation $            442,000 Gain on Disposal of Assets $              34,000 Equipment $        1,020,000 (To Record Sale of Equipment) 1-Jun Cash $        1,560,000 Land $            403,000 Gain on Sale of Land $        1,157,000 (To Record Sale of Land) 1-Jul Equipment $        2,580,000 Cash $        2,580,000 (To Recotrd Equipmnet Purchase) 31-Dec Depreciation Expesnes $              49,000 Accumulated Depreciation- Equipment $              49,000 (To record Depreciation on Equipment) 31-Dec Accumulated Depreciation- Equipment $            490,000 Equipment $            490,000 (Being Equipment Retired)

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