Problem 9-5A At December 31, 2017, Grand Company reported the following as plant

Question

Problem 9-5A At December 31, 2017, Grand Company reported the following as plant assets Land 3,770,000 $27,870,000 Less: Accumulated depreciation-buildings 1900000 15,970,000 Equipment 48,370,000 Less: Accumulated depreciation-equipment 4,850,000 43.520.000 Total plant assets 563,260,000 During 2018, the following selected cash transactions occurred April 1 Purchased land for $2,120,000. May 1 Sold equipment that cost $930,000 when purchased on January 1, 2014. The equipment was sold for $558,000 dune 1 Sold land purchased on June 1 2008 for $1,490,000. The land cost $394,000 July 1 Dec. 31 Retired equipment that cost s508,000 when purchased on December 31, 2008. T The company recelived no proceeds related to salvage. value. The equipment is account tities Do not indent manually Record journal entries in the order presented in the problem select "No Entry for the account titles and enter O for the amounts.) Date Account Titles and Explanation Credit

Explanation / Answer

cost of equipment

930000

less total accumulated depreciation on equipment = 372000+31000 = (930000/10)*4 + (93000*4/12)

403000

balance in equipment account

527000

selling price

558000

gain on sale of equipment =558000-527000

31000

Journal entries

date

explanation

debit

credit

1-Apr

cash

2120000

land

2120000

1-May

depreciation on equipment

527000

accumulated depreciation on equipment

527000

1-May

cash

558000

accumulated depreciation on equipment

403000

gain on sale of equipment

31000

equipment

930000

1-Jun

cash

1490000

land

394000

gain on sale of land

1096000

1-Jul

equipment

2480000

cash

2480000

31-Dec

depreciation expense

557400

accumulated depreciation on building

557400

31-Dec

accumulated depreciation on equipment

508000

equipment

508000

31-Dec

depreication expense- equipment

4868000

accumulated depreciation on equipment

4868000

Plant assets

land

(3770000+2120000-394000)

5496000

Building

27870000

less accumulated depreciation

11900000+557400

12457400

15412600

equipment

49412000

less accumulated depreciation on equiment

8838000

40574000

total plant assets

61482600

Balance in equipment account

jan 1 2018

balance in equipment

48370000

1-May

sales of equipment

-930000

31-Dec

sale of equipment

-508000

31-Dec

balance in old equipment

46932000

1-Jul

purchase of equipment

2480000

year end balance in equipment

49412000

Depreciation expense charged on equipment on balance of dec 31 2018

depreciation on the old balance of equipment

46932000*10%

4693200

depreciation on new purchase of equipment

2480000/10*1/2

124000

depreciation on equipment sold on dec 31

508000/10

50800

total depreciation charged on dec 31 2018

4868000

accumulated depreciation on equipment

debit

credit

jan 1 2018

balance in accumulated depreciation on equipment

4850000

1-May

equipment

403000

1-May

depreciation expense

31000

31-Dec

equipment

508000

31-Dec

depreciation expense

4868000

31-Dec

total

911000

9749000

31-Dec

balance in accumulated depreciation on equipment

9749000-911000

8838000

cost of equipment

930000

less total accumulated depreciation on equipment = 372000+31000 = (930000/10)*4 + (93000*4/12)

403000

balance in equipment account

527000

selling price

558000

gain on sale of equipment =558000-527000

31000

Journal entries

date

explanation

debit

credit

1-Apr

cash

2120000

land

2120000

1-May

depreciation on equipment

527000

accumulated depreciation on equipment

527000

1-May

cash

558000

accumulated depreciation on equipment

403000

gain on sale of equipment

31000

equipment

930000

1-Jun

cash

1490000

land

394000

gain on sale of land

1096000

1-Jul

equipment

2480000

cash

2480000

31-Dec

depreciation expense

557400

accumulated depreciation on building

557400

31-Dec

accumulated depreciation on equipment

508000

equipment

508000

31-Dec

depreication expense- equipment

4868000

accumulated depreciation on equipment

4868000

Plant assets

land

(3770000+2120000-394000)

5496000

Building

27870000

less accumulated depreciation

11900000+557400

12457400

15412600

equipment

49412000

less accumulated depreciation on equiment

8838000

40574000

total plant assets

61482600

Balance in equipment account

jan 1 2018

balance in equipment

48370000

1-May

sales of equipment

-930000

31-Dec

sale of equipment

-508000

31-Dec

balance in old equipment

46932000

1-Jul

purchase of equipment

2480000

year end balance in equipment

49412000

Depreciation expense charged on equipment on balance of dec 31 2018

depreciation on the old balance of equipment

46932000*10%

4693200

depreciation on new purchase of equipment

2480000/10*1/2

124000

depreciation on equipment sold on dec 31

508000/10

50800

total depreciation charged on dec 31 2018

4868000

accumulated depreciation on equipment

debit

credit

jan 1 2018

balance in accumulated depreciation on equipment

4850000

1-May

equipment

403000

1-May

depreciation expense

31000

31-Dec

equipment

508000

31-Dec

depreciation expense

4868000

31-Dec

total

911000

9749000

31-Dec

balance in accumulated depreciation on equipment

9749000-911000

8838000

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