Analyze trhe each transaction in the Item collul Item P9-2A At December 31, 2017

Question

Analyze trhe each transaction in the Item collul Item P9-2A At December 31, 2017, Arno s column, l OtRO ramounts in the Other Accounts Buildings $302,170 Land alize equipment ctions related to purchase, tirement, and depreciation 5), AP s 3,000,000 11.925,000 14,575.000 5,000,000 35,000,000 mber 31, 2017, Arnold Corporation reported the following $26,500,000 Land Buildings Less: Accumulated depreciation-buildings Equipment 40,000,000 Less: Accumulated depreciation-equipment $52,575,000 Total plant assets ng 2018, the following selected cash transactions occurred. Apr 1 Purchased land for $2,200,000. During May 1 Sold equipment that cost $600,000 when purchased on January1,20 The equipment was sold for $170,000. June 1 Sold land for $1,600,000. The land cost $1,000.000 July 1 Purchased equipment for $1,100,000. Dec. 31 Retired equipment that cost $700,000 when purchased on December 31 2008. No salvage value was received. Instructions (a) Journalize the transactions. (Hint: You may wish to set up T-accounts, post beginning balances, and then post 2018 transactions.) Arnold 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 sal vage value. Update depreciation on assets disposed of at the time of sale or retirement. (b) Record adjusting entries for depreciation for 2018. ets $50,037,500 (c) Prepare the plant assets section of Arnold's balance sheet at December 31, 2018.

Explanation / Answer

Solution:

a) Preparing the Journal Entries for the Above Transactions:

b) Recording the Adjusting Entries for the Depreciation for 2018:

*($40,000,000 – $600,000 – $700,000)

c) Preparing the Plant Assets Section of Arnold's Balance Sheet at December 31, 2018:

ARNOLD CORPORATION

Partial Balance Sheet

December 31, 2018

Preparing the T-Accounts for the General Ledger:

Date General Journal Debit Credit April 1 Land $2,200,000 Cash $2,200,000 May 1 Depreciation Expense $20,000 Accumulated Depreciation - Equipment ($600,000 * 1/10 * 4/12) $20,000 May 1 Accumulated Depreciation - Equipment $440,000 Cash $170,000 Equipment $600,000 Gain on Disposal of Plant Assets $10,000* June 1 Cash $1,600,000 Land $1,000,000 Gain on Disposal of Plant Assets $600,000 July 1 Equipment $1,100,000 Cash $1,100,000 Dec 31 Depreciation Expense $70,000 Accumulated Depreciation - Equipment ($700,000 * 1/10) $70,000 Dec 31 Accumulated Depreciation - Equipment $700,000 Equipment $700,000

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