Problem 9-4A At January 1, 2017, Sandhill Co. reported the following property, p

Question

Problem 9-4A At January 1, 2017, Sandhill Co. reported the following property, plant, and equipment accounts: Accumulated depreciation-buildings $60,700,000 Accumulated depreciation-equipment 54,600,000 Buildings Equipment Land 97,400,000 150,800,000 21,000,000 The company uses straight-line depreciation for buildings and equipment, its year-end is December 31, and it makes adjusting entries annually. 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. During 2017, the following selected transactions occurred. Apr. 1 Purchased land for $4.7 million. Paid $1.175 million cash and issued a 3-year, 6% note payable for the balance. Interest on the note is payable annually each April edn 5ion Sold equipment for $230,000 cash. The equipment cost $3.84 million when originally purchased on January 1, 2009. Sold land for $4.89 million. Received $900,000 million cash and accepted a 3-year, 5% note for the balance. The land cost $1.30 million when purchased on June 1, 2011. Interest on the note is due annually each June 1 Purchased equipment for $2.40 million cash. Retired equipment that cost $1 million when purchased on December 31, 2007. No proceeds were received May 1 June 1 July 1 Dec. 31

Explanation / Answer

DATE Account Title Debit Credit 1 1-Apr Land 4700000 Cash 1175000 3Yr. 6% Note Payable 3525000 2 1-May Depreciation- Equipment 128000 Accumulateddepn.-Eqpt 128000 (To Record Depn for 4 months on the equipment sold-3840000/10/12*4 3 1-May Cash 230000 Accumulted Depn.Eqpt. 3200000 Loss on Disposal(Plug-in Fig.) 410000 Equipment 3840000 (to Record Sale of Eqpt.) 4 1-Jun Cash 900000 3Yr. 5% Note Payable 3990000 Land 1300000 Gain on disposal 3590000 5 1-Jul Equipment 2400000 Cash 2400000 6 31-Dec Depreciation- Equipment 100000 Accumulated depn.-Eqpt 100000 (To Record Depn for the current yearon the equipment retired-1000000/10 7 31-Dec Accumulated depn.-Eqpt 1000000 Equipment 1000000 (Fully Depreciated asset retired) Adjusting entries a Dec 31 1 31-Dec Depreciation-Building 2435000 Accumulated depn.-Bldg. 2435000 (To record depn.expense for the Building) 2 31-Dec Depreciation-Equipment 14716000 Accumulated depn.-eqpt. 14716000 (To record depn.expense for the Eqp.) 3 31-Dec Interest expense 158625 Interest Payable 158625 (interest payable on 3525000@6%for9monhs) 4 31-Dec Interest Receivable 116375 Interest Revenue 116375 (Interest accrued on 3990000@5% for 7 Months) Adj. JE 2 Depn Asset value St.line Depn. Full-yr. 145960000 14596000 6 mths. 2400000 120000 Depn.for the yr. 148360000 14716000 Land a/c Op.bal. 21000000 JE 1 4700000 JE 4 1300000 Cl.bal. 24400000 25700000 25700000 Equipment a/c Op.bal. 150800000 JE 3 3840000 JE 5 2400000 JE 7 1000000 Cl.Bal. 148360000 153200000 153200000 Accumulated Depn.Eqpt A/c Op.bal 54600000 128000 3200000 JE 6 100000 JE 7 1000000 AdjJE 2 14716000 Cl bal. 65344000 69544000 69544000 Sandhill Co Statement of Financial Position(Partial) Dec 31 2017 Property,Plant & Equipment Land 24400000 Buildings 97400000 Less:Accumulated Depn.-Buildings 63135000 34265000 Equipment 148360000 Less:Acc.Depn. 65344000 83016000 Total Property,Plant & Equipment 141681000

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