Question

At December 31, 2017, Novak Corporation reported the following plant assets. Land $ 3,198,000 Buildings $26,610,000 Less: Accumulated depreciation—buildings 12,712,050 13,897,950 Equipment 42,640,000 Less: Accumulated depreciation—equipment 5,330,000 37,310,000 Total plant assets $54,405,950 During 2018, the following selected cash transactions occurred. Apr. 1 Purchased land for $2,345,200. May 1 Sold equipment that cost $639,600 when purchased on January 1, 2011. The equipment was sold for $181,220. June 1 Sold land for $1,705,600. The land cost $1,066,000. July 1 Purchased equipment for $1,172,600. Dec. 31 Retired equipment that cost $746,200 when purchased on December 31, 2008. No salvage value was received. Collapse question part (a) Journalize the transactions. Novak 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 salvage value. Update depreciation on assets disposed of at the time of sale or retirement. (Record entries in the order displayed in the problem statement. 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 enter 0 for the amounts.)

Answer 1

	Date	Accounts title and explanation	Dr($)	Cr($)
(a)	Apr 1	Land	$ 2,345,200
		Cash		$ 2,345,200
		(To record the land purchase)
	May 1	Depreciation Expense	$      21,320
		Accumulated Depreciation—Equipment		$      21,320
		($639,600 X 1/10 X 4/12)
		(To record the depreciation expense)
	May 1	Cash	$    181,220
		Accumulated Depreciation— Equipment	$    469,040
		Equipment		$    639,600
		Gain on Disposal of Plant Assets		$      10,660
		(To record the sale of equipment)
		Cost	$639,600
		Accum depreciation—equipment	469,040
		[($639,600 X 1/10 X 7) + $21,320]
		Book value	170,560
		Cash proceeds	181,220
		Gain on disposal	$10,660
	June 1	Cash	$ 1,705,600
		Land		$ 1,066,000
		Gain on Disposal of Plant Assets		$    639,600
		(To record the sale of land)
	July 1	Equipment	$ 1,172,600
		Cash		$ 1,172,600
		(To record the purchase of equipment)
	Dec 31	Depreciation Expense	$      74,620
		Accumulated Depreciation—Equipment		$      74,620
		($746,200 X 1/10)
		(To record the depreciation expense on retitring equipment)
	Dec 31	Accumulated Depreciation—Equipment	$    746,200
		Equipment		$    746,200
		(To record the retirement of equipment)
		Cost	$    746,200
		Accum depreciation— equipment
		($746,200 X 1/10 X 10)	746,200
		Book value	-