Problem 9-5A (Part Level Submission) (a) Date Account Titles and Explanation Deb

Question

Problem 9-5A (Part Level Submission)

(a)

Date

Account Titles and Explanation

Debit

Credit

(To record depreciation)

May 1

(To record sale of equipment)

(To record depreciation)

(To record retirement of equipment)

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(b)

Date

Account Titles and Explanation

Debit

Credit

(To record building depreciation)

(To record equipment depreciation)

Problem 9-5A (Part Level Submission)

At December 31, 2017, Grand Company reported the following as plant assets. Land $ 4,320,000 Buildings $29,800,000 Less: Accumulated depreciation—buildings 10,570,000 19,230,000 Equipment 47,520,000 Less: Accumulated depreciation—equipment 4,910,000 42,610,000     Total plant assets $66,160,000
During 2018, the following selected cash transactions occurred. April 1 Purchased land for $2,000,000. May 1 Sold equipment that cost $840,000 when purchased on January 1, 2014. The equipment was sold for $504,000. June 1 Sold land purchased on June 1, 2008 for $1,430,000. The land cost $393,000. July 1 Purchased equipment for $2,440,000. Dec. 31 Retired equipment that cost $480,000 when purchased on December 31, 2008. The company received no proceeds related to salvage.

Explanation / Answer

SOLUTION

(A)

**

(B)

* {($47,520,000 - $840,000 - $480,000) *1/10] + ($2,440,000 *1/10 * 6/12)

= $4,620,000 + $122,000 = $4,742,000

Date Account titles and Explanation Debit ($) Credit ($) April 1 Land 2,000,000 Cash 2,000,000 May 1 Depreciation expense 28,000   Accumulated Depreciation- Equipment ($840,000*1/10*4/12) 28,000 ** Cash 504,000 Accumulated Depreciation - Equipment 364,000 Equipment 840,000 Gain on disposal 28,000 June 1 Cash 1,430,000 Land 393,000 Gain on sale of land 1,037,000 July 1 Equipment 2,440,000 Cash 2,440,000 Dec. 31 Depreciation Expense 48,000   Accumulated Depreciation- Equipment ($480,000*1/10) 48,000 Accumulated Depreciation- Equipment 480,000 Equipment 480,000

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