9-2A At December 31, 2017, rnold Corporation reported the following plant assets
ID: 2583206 • Letter: 9
Question
9-2A At December 31, 2017, rnold Corporation reported the following plant assets. Journalize equipment transactions related to purchase, sale, retirement, and depreciation. (LO 2, 3, 5), AP 3,000,000 Land Buildings Less: Accumulated depreciation-buildings Equipment Less: Accumulated depreciation -equipment Total plant assets $26,500,000 1,925,00014,575,000 40,000,000 5,000,000 35,000,000 $52,575,000 XLS During 2018, the following selected cash transactions occurred. Apr. 1 Purchased land for $2,200,000. May 1 Sold equipment that cost $600,000 when purchased on January 1, 2011. June 1 July1 Dec. 31 The equipment was sold for $170,000. Sold land for $1,600,000. The land cost $1,000,000. Purchased equipment for $1,100,000 Retired equipment that cost $700,000 when purchased on December 31, 2008. No salvage value was received. Instructions (a) Journalize the transactions. (Hint: You may wish to set up T-accounts, post beginning balances, and then post 2018 transactions.) Arnold uses straight-line depreciation for buildings and equipment. The buildings are estimated to have a 40-year useful life and no salvage value; the equipment is estimated to have a 10-year useful life and no sal- vage value. Update depreciation on assets disposed of at the time of sale or retirement. (b) Record adjusting entries for depreciation for 2018. (c) Prepare the plant assets section of Arnold's balance sheet at December 31, 2018. Tot plant assets $50,037,500Explanation / Answer
(c)
Workings:
(a) Date Account Titles and Explanation Debit Credit Apr. 1 Land 2200000 Cash 2200000 (To record purchase of land) May. 1 Depreciation expense (600000/10 x 4/12) 20000 Accumulated depreciation-equipment 20000 (To record depreciation till date of sale) May. 1 Cash 170000 Accumulated depreciation-equipment 440000 [(600000 / 10 x 7) + 20000] Equipment 600000 Gain on disposal of assets 10000 (To record sale of equipment) Jun. 1 Cash 1600000 Land 1000000 Gain on disposal of assets 600000 (To record sale of land) Jul. 1 Equipment 1100000 Cash 1100000 (To record purchase of equipment) Dec. 31 Depreciation expense (700000/10 years) 70000 Accumulated depreciation-equipment 70000 (To record depreciation till date of retirement) Dec. 31 Accumulated depreciation-equipment 700000 Equipment 700000 (To record equipment retired) (b) Date Account Titles and Explanation Debit Credit Dec. 31 Depreciation expense (26500000 / 40 years) 662500 Accumulated depreciation-buildings 662500 (To record depreciation on buildings) Dec. 31 Depreciation expense 3925000 Accumulated depreciation-equipment 3925000 [(40000000-600000-700000) x 10%]+[1100000 x 10% x 6/12] (To record depreciation on equipment)Related Questions
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