Problem
At December 31, 2017, Grand Company reported the following as plant assets.
|
Land
|
|
$ 4,180,000
|
|
Buildings
|
$27,310,000
|
|
|
Less: Accumulated depreciation-buildings
|
12,890,000
|
14,420,000
|
|
Equipment
|
47,470,000
|
|
|
Less: Accumulated depreciation-equipment
|
4,530,000
|
42,940,000
|
|
Total plant assets
|
|
$61,540,000
|
During 2018, the following selected cash transactions occurred.
April 1 Purchased land for $2,060,000.
May 1 Sold equipment that cost $1,050,000 when purchased on January 1, 2014. The equipment was sold for $630,000.
June 1 Sold land purchased on June 1, 2008 for $1,520,000. The land cost $400,000.
July 1 Purchased equipment for $2,540,000.
Dec. 31 Retired equipment that cost $494,000 when purchased on December 31, 2008. No salvage value was received.
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Journalize the above transactions. The company uses straight-line depreciation for buildings and equipment. The buildings are estimated to have a 50-year life and no salvage value. The equipment is estimated to have a 10-year useful life and no salvage value. Update depreciation on assets disposed of at the time of sale or retirement.
|
Date
|
Account Titles and Explanation
|
Debit
|
Credit
|
|
 Apr. 1
|
Land
|
2060000
|
|
|
Cash
|
|
2060000
|
|
May 1
|
Depreciation Expense
|
35000
|
|
|
Accumulated Depreciation-Equipment
|
|
35000
|
|
(To record depreciation)
|
|
|
|
May 1
|
cash
|
630000
|
|
|
Accumulated Depreciation-Equipment
|
455000
|
|
|
Equipment
|
|
1050000
|
|
Gain on Disposal of Plant Assets
|
|
35000
|
|
(To record sale of equipment)
|
|
|
|
June 1
|
Cash
|
1520000
|
|
|
Gain on Disposal of Plant Assets
|
|
1120000
|
|
Land
|
|
400000
|
|
July 1
|
Equipment
|
2540000
|
|
|
Cash
|
|
2540000
|
|
Dec. 31
|
Depreciation Expense
|
49400
|
|
|
Accumulated Depreciation-Equipment
|
|
49400
|
|
(To record depreciation)
|
|
|
|
Dec. 31
|
Accumulated Depreciation-Equipment
|
494000
|
|
|
Equipment
|
|
494000
|
|
(To record retirement of equipment)
|
|
|
Record adjusting entries for depreciation for 2018.