Problem 9-4A (Part Level Submission) (a) Date Account Titles and Explanation Deb
ID: 2588955 • Letter: P
Question
Problem 9-4A (Part Level Submission)
(a)
Date
Account Titles and Explanation
Debit
Credit
May 1
June 1
SHOW LIST OF ACCOUNTS
LINK TO TEXT
LINK TO TEXT
LINK TO TEXT
LINK TO TEXT
(b)
Date
Account Titles and Explanation
Debit
Credit
Dec. 31
(To record depreciation expense for buildings)
Dec. 31
(To record depreciation expense for equipment)
Dec. 31
(To record interest incurred but not yet paid)
Dec. 31
(To record interest accrued but not yet received)
Problem 9-4A (Part Level Submission)
At January 1, 2017, Blossom Company reported the following property, plant, and equipment accounts:Accumulated depreciation—buildings $60,950,000 Accumulated depreciation—equipment 52,850,000 Buildings 97,300,000 Equipment 150,200,000 Land 24,000,000
The company uses straight-line depreciation for buildings and equipment, its year-end is December 31, and it makes adjusting entries annually. 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 salvage value.
During 2017, the following selected transactions occurred:
Apr. 1 Purchased land for $5.00 million. Paid $1.250 million cash and issued a 3-year, 6% note payable for the balance. Interest on the note is payable annually each April 1. May 1 Sold equipment for $240,000 cash. The equipment cost $3.72 million when originally purchased on January 1, 2009. June 1 Sold land for $4.38 million. Received $750,000 cash and accepted a 3-year, 5% note for the balance. The land cost $1.30 million when purchased on June 1, 2011. Interest on the note is due annually each June 1. July 1 Purchased equipment for $2.30 million cash. Dec. 31 Retired equipment that cost $1 million when purchased on December 31, 2007. No proceeds were received.
Explanation / Answer
a) Journal entries (Amount in $)
b) Journal entries (Amount in $)
Working notes :-
WN1 - Calculation of Depreciation expense on Equipment on December 31
Depreciation of remaining equipment = (150,200,000 - 3,720,000 - 1,000,000)/10 = $14,548,000
Depreciation on new purchased equipment = (2,300,000/10)*6/12 = 115,000
Total depreciation = 14,548,000+115,000 = $14,663,000
Date Account titles and explanation Debit Credit April 1 Land 5,000,0000 Cash 1,250,000 Note Payable (Bal.fig) 3,750,000 (To record purchase of Land) May 1 Depreciation expense (3,720,000/10)*4/12 124,000 Accumulated Depreciation-Equipment 124,000 (To record depreciation on sale of equipment till the date of sale) May 1 Cash 240,000 Accumulated Depreciation-Equipment [(3,720,000*8/10)+124,000] 3,100,000 Loss on Disposal (Bal.fig) 380,000 Equipment 3,720,000 (To record sale of equipment) June 1 Cash 750,000 Note Receivable (4,380,000-750,000) 3,630,000 Land 1,300,000 Gain on disposal (Bal.fig) 3,080,000 (To record sale of land) July 1 Equipment 2,300,000 Cash 2,300,000 (To record purchase of equipment) Dec. 31 Depreciation Expense (1,000,000/10) 100,000 Accumulated Depreciation-Equipment 100,000 (To record depreciation expense on equipment retired) Dec. 31 Accumulated Depreciation-Equipment 1,000,000 Equipment 1,000,000 (To record retirement of equipment after 10 years of use)Related Questions
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