A. Journalize the transactions. Navarro uses straight-line depreciation for buil
ID: 2487805 • Letter: A
Question
A. Journalize the transactions. Navarro uses straight-line depreciation for buildings and equipment. The buildings are estimated to have a 40-year useful 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.B. Record adjusting entries for depreciation for 2015
ug Kimmel, Financial Accounting, 7e nment Problem 9-2A At December 31, 2014, Navaro Corporation reported the following plant assets $3,576,000 Buildings 35,890,000 14,214,600 47,680,000 21,675,400 Equipment Less: Accumulated depreciation 5,960,000 41.720,000 Total plant assets 971,400 During 2015, the following selected cash transactions occurred. Apr. 1 Purchased land for $2,622,400 May 1 Sold equipment that cost $715,200 when purchased on January 1, 2008. The equipment was sold for $202,640. June 1 Sold land for $1,907,200. The land cost $1,192,000. uly 1 Purchased equipment for $1,311,200. Dec. 31 Retired equipment that cost $834,400 when purchased on December 31, 2005. No salvage value was received. our answer is correct value; the equipment is estimated to have a 10-year useful life and no salvage value. Update depreciation on assets disposed entries in the order displayed in the problem statement. Credit account titles are automatically indented when amount
Explanation / Answer
Useful life of building 40 years Salvage value - Equipment useful life 10 years Salvage value - as at 31 dec 2014 Workings: Land 3,576,000 Buildings 35,890,000 Less: accumulated depreciation 14,214,600 21,675,400 Equipment 47,441,600 Less: accumulated depreciation 5,960,000 41,481,600 total plant asset 66,733,000 A) Date Accounts Debit Credit 1-May Depreciation 23,840 accumulated depreciation-Equipment 23,840 1-Jun Cash 1,907,200 Land 1,192,000 Profit on sale of land 715,200 1-Jul Depreciation 65,560 accumulated depreciation-Equipment 65,560 as at 31 dec 2015 Land 5,006,400.00 (3576000+2622400-1192000) Buildings 35,890,000 Less: accumalted depreciation 15,111,850 20,778,150 14214600+897250 Equipment 47,680,000 Less: accumalted depreciation 10,745,880 36,934,120 total plant asset 62,718,670 workings: Sale of Equipment cost - 1/1/8 715,200 Depreciation from 2008 to 2014 500,640 715200/10*7 depreciation for 2015- 4months 23,840 715200/120*4 total depreciation 524,480 WDV (cost-total depreciation) 190,720 Sale value 202,640 Profit on sale 11,920 sale of land: cost 1,192,000 sale value 1,907,200 715,200 Purchase of Equipment 2015 Cost 1st July 1,311,200 Depreciation for 6 months 65,560 1311200/120*6 retired Equipment: 834,400 opening Equipment balance: 47,680,000 Addition during 2015 1,311,200 Sale (715,200) retired (834,400) balance as on 31st dec 2015 47,441,600 Depreciation on equipment: opening Accumulated depreciation 5,960,000 Dep on new equipment 65,560 Dep on sold equipment 23,840 Depreciation on balance -2015 4,696,480 (47680000-715200)/10 Total WDV 10,745,880 Depreciation on building 897,250 35890000/40
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