At December 31, 2017, Grand Company reported the following as plant assets. Land
ID: 2553129 • Letter: A
Question
At December 31, 2017, Grand Company reported the following as plant assets. Land Buidings Less: Accumulated depreciation-buildings 13,200,000 15,010,000 $ 3,980,000 $28,210,000 Equipment 48,670,000 Accumulated depreciation-equipment ,980,000 43,690,000 $62,680,000 Total plant assets During 2018, the following selected cash transactions occurred April 1 May 1 Purchased land for $2,200,000. Sold equipment that cost $840,000 when purchased on January 1, 2014. The equipment was sold for $504,000. $1,450,000. The land cost s399,000. une 1 Sold land purchased on June 1, 2008 for uly 1 Purchased equipment for $2,480,000. Retired equipment that cost $491,000 when purchased on December 31, 2008. The company received no proceeds related to salvage Dec. 31 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 tities and enter O for the amounts.) Account Titles and Date Debit Credit (To record depreciation) May 1 Problem 9-5A Page 2 of 3 To record depreciation) (To recond retirement of Record adjusting entries for depreciation for 2018. (Credit account titles are automatically indented when amount is entered. Do not indent manually, Record journal entries in the arder presented in the problem. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)Explanation / Answer
Answer 1. Journal Entry Date Particulars Dr. Amt. Cr. Amt. 1-Apr-18 Land 2,200,000.00 Cash 2,200,000.00 (To record the purchase of Land) 30-Apr-18 Depreciation Expense 28,000.00 $840,000 / 10 years X (4/12) Accumulated Depreciation - Equipment 28,000.00 (To record the depreciation expense on Equipment sold) 1-May-18 Cash 504,000.00 Accumulated Depreciation - Equipment 364,000.00 ($840,000 / 10 Years) X 4 Years + $28,000 Equipment 840,000.00 Gain on Sale of Equipment 28,000.00 $504,000 - ($840,000 - $364,000) (To record the sale of Equipment) 1-Jun-18 Cash 1,450,000.00 Land 399,000.00 Gain on Sale of Land 1,051,000.00 $1,450,000 - $399,000 (To record the sale of Land) 1-Jul-18 Equipment 2,480,000.00 Cash 2,480,000.00 (To record the purchase of equipment) 31-Dec-18 Depreciation Expense 49,100.00 $491,000 / 10 Years Accumulated Depreciation - Equipment 49,100.00 (To record the depreciation expense on Equipment retired) 31-Dec-18 Accumulated Depreciation - Equipment 491,000.00 ($491,000 / 10 Years) X 10 Years Equipment 491,000.00 (To record the equipment retired) 31-Dec-18 Depreciation Expense 564,200.00 $28,210,000 / 50 Years Accumulated Depreciation - Buildings 564,200.00 (To record the depreciation expense on Buildings) 31-Dec-18 Depreciation Expense 4,857,900.00 Accumulated Depreciation - Equipment 4,857,900.00 (To record the depreciation expense on Equipment) Deprceiation on Equipment = ($48,670,000 - ($840,000 + $491,000)) / 10 Years Deprceiation on Equipment = $4,733,900 Depreciation on Equipment Purchased = ($2,480,000 / 10 Years) X 6/12 Depreciation on Equipment Purchased = $124,000 Total Depreciation on Equipment = $4,733,900 + $124,000 = $4,857,900 Answer 2. GRAND COMPANY Balance Sheet (Partial) As on Dec 31, 2018 Property, Plant & Equipment Land ($3,980,000 - $399,000) 3,581,000.00 Buildings 28,210,000.00 Less: Accumulated Depreciation - Buildings (13,764,200.00) 14,445,800.00 Equipment ($48,670,000 + $2,480,000 - $1,331,000) 49,819,000.00 Less: Accumulated Depreciation - Equipment (9,060,000.00) 40,759,000.00 Total Property, Plant & Equipment 58,785,800.00
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