Exercise 10-25 On April 1, 2017, Culver Company received a condemnation award of

Question

Exercise 10-25 On April 1, 2017, Culver Company received a condemnation award of $627,800 cash as compensation for the forced sale of the company's land and building, which stood in the path of a new state highway. The land and building cost $87,600 and $408,800, respectively, when they were acquired. At April 1, 2017, the accumulated depreciation relating to the building amounted to $233,600. On August 1, 2017, Culver purchased a piece of replacement property for cash. The new land cost $131,400, and the new building cost $584,000 Prepare the journal entries to record the transactions on April 1 and August 1, 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter0 for the amounts.) Date Account Titles and Explanation Debit Credit April 1 Aug. 1

Explanation / Answer

Required journal entries are as prepared below:

Date Particulars L.F Amount ($) Amount ($) 2017 Apr-01 Cash 627,800 Accumulated dep 233,600 Land 87,600 Building 408,800 Gain on sale 365,000 (For land and building sold) Aug-01 land 131,400 Building 584,000 Cash 715,400 (for property purchased)

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