Problem 9-5A Journalize the above transactions. The company uses straight-line d
ID: 2555504 • Letter: P
Question
Problem 9-5A
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.)
Date
Account Titles and Explanation
Debit
Credit
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 order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Date
Account Titles and Explanation
Debit
Credit
Problem 9-5A
At December 31, 2017, Grand Company reported the following as plant assets.Land $ 3,710,000 Buildings $27,420,000 Less: Accumulated depreciation—buildings 13,940,000 13,480,000 Equipment 47,200,000 Less: Accumulated depreciation—equipment 4,820,000 42,380,000 Total plant assets $59,570,000
During 2018, the following selected cash transactions occurred.
April 1 Purchased land for $2,030,000. May 1 Sold equipment that cost $960,000 when purchased on January 1, 2014. The equipment was sold for $576,000. June 1 Sold land purchased on June 1, 2008 for $1,500,000. The land cost $397,000. July 1 Purchased equipment for $2,510,000. Dec. 31 Retired equipment that cost $503,000 when purchased on December 31, 2008. The company received no proceeds related to salvage.
Explanation / Answer
Answer
Working
Equipment sold on May 1
A
Cost
$960000
B
Life
10
C=A/B
Annual Depreciation
96000
1
2014 Depreciation
96000
2
2015 Depreciation
96000
3
2016 Depreciation
96000
4
2017 Depreciation
96000
5
2018 Depreciation till 30 June
32000
D=1+2+3+4+5
Total Accumulated Depreciation
$416000
E=A-D
Book Value at the time of Sale
544000
F
Sold for
576000
G=F-E
Gain on Sale
$32000
Working
Equipment retired on Dec 31
A
Cost
503000
B
Life
10
C=A/B
Annual Depreciation
50300
D=C x 10 years
Accumulated Depreciation [from 1 Jan 2009 to 31 Dec 2018]
$503000
E=A-D
Book Value
0
Building
27420000
(+) Purchases
0
Total
27420000
Life (in years)
50
A
Annual Depreciation
$548400
Equipment
47200000
(-) Sold and retired
1463000
Old Equipment remaining
45737000
Life (years)
10
B
Annual Depreciation
$4573700
New Equipment purchased
2510000
Annual Depreciation
251000
C
2018 Depreciation [6 months]
$125500
A+B+C
Depreciation expense for 2018 for remaining assets
$5247600
Date
General Journal
Debit $
Credit $
Apr-01
Land
2030000
Cash
2030000
May-01
Depreciation expense
32000
Accumulated Depreciation-Equipment
32000
(up-dation of depreciation)
May-01
Cash
576000
Accumulated Depreciation-Equipment
416000
Equipment
960000
Gain on Sale
32000
Jun-01
Cash
1500000
Gain on Sale
1103000
Land
397000
Jul-01
Equipment
2510000
Cash
2510000
Dec-31
Depreciation expense
50300
Accumulated Depreciation-Equipment
50300
(depreciation for the equipment retired)
Dec-31
Accumulated Depreciation-Equipment
503000
Equipment
503000
(equipment retired)
Dec-31
Depreciation expense
5247600
Accumulated Depreciation-Building
548400
Accumulated Depreciation-Equipment
4699200
Working
Equipment sold on May 1
A
Cost
$960000
B
Life
10
C=A/B
Annual Depreciation
96000
1
2014 Depreciation
96000
2
2015 Depreciation
96000
3
2016 Depreciation
96000
4
2017 Depreciation
96000
5
2018 Depreciation till 30 June
32000
D=1+2+3+4+5
Total Accumulated Depreciation
$416000
E=A-D
Book Value at the time of Sale
544000
F
Sold for
576000
G=F-E
Gain on Sale
$32000
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