Question

In: Accounting

Tolson Company purchased a building by paying $85,000. The building has an estimated life of 40...

Tolson Company purchased a building by paying $85,000. The building has an estimated life of 40 years and an estimated residual value of $5,000.

Required:

Prepare journal entries to record the purchase and the related year-end adjusting entry.

Solutions

Expert Solution

Journal entries
Transaction ACCOUNT TITLES AND EXPLANATIONS DEBIT ($) CREDIT ($)
1 Building          85,000.00
Cash          85,000.00
(Being building purchased for cash)
2 Depreciation Expense of Building            2,000.00
Building            2,000.00
(To record depreciation on building)
Explanation
Depreciation Expense of Building = ($85,000-$5,000) / 40
                                                  = $2,000

ekkarill92 answered 2 months ago
Next > < Previous

Related Solutions

On January 1, Tolson Company purchased a building by paying $50,000. The building has an estimated...
On January 1, Tolson Company purchased a building by paying $50,000. The building has an estimated life of 40 years and an estimated residual value of $10,000. Prepare journal entries to record the purchase and the related year-end adjusting entry.
The Abdulla Company purchased a building that cost AED 520,000. The building was estimated to have...
The Abdulla Company purchased a building that cost AED 520,000. The building was estimated to have 20,000 salvage value and 5 years of life. Required: a) (1.5 Marks) Determine depreciation for year 1 and year 2 and record the journal entry using the following methods:       Sum of the years digits method       Straight line method b) (0.5 Mark) What is the monthly depreciation for each method? Formula: - Sum of the years digits = Step 1 Calculate the Sum...
Bailand Company purchased a building for $210,000 that had an estimated residual value of $10,000 and...
Bailand Company purchased a building for $210,000 that had an estimated residual value of $10,000 and an estimated service life of 10 years. Bailand purchased the building 4 years ago and has used straight-line depreciation. At the beginning of the fifth year (before it records depreciation expense for the year), the following independent situations occur: 1. Bailand estimates that the asset has 8 years’ life remaining (for a total of 12 years). 2. Bailand changes to the sum-of-the-years’-digits method. 3....
Bailand Company purchased a building for $210,000 that had an estimated residual value of $10,000 and...
Bailand Company purchased a building for $210,000 that had an estimated residual value of $10,000 and an estimated service life of 10 years. Bailand purchased the building 4 years ago and has used straight-line depreciation. At the beginning of the fifth year (before it records depreciation expense for the year), the following independent situations occur: 1. Bailand estimates that the asset has 8 years’ life remaining (for a total of 12 years). 2. Bailand changes to the sum-of-the-years’-digits method. 3....
1. A building was purchased for $240,000 and has a useful life of 30 years, and...
1. A building was purchased for $240,000 and has a useful life of 30 years, and a residual value of $90,000. After it has been used 5 years, its accumulated depreciation using the straight-line method would be a. $12,500 b. $50,000 c. $25,000 d. $40,000 2. Massachusetts Mining Company purchased a gravel pit for $2,500,000. It is estimated that 5 million tons of gravel can be extracted over the pit's useful life, with a residual value of $700,000. If 4...
1. A plant asset purchased for $725,000 has an estimated life of 10 years and a...
1. A plant asset purchased for $725,000 has an estimated life of 10 years and a residual value of $36,250. Depreciation for the second year of use, determined by the declining-balance method at twice the straight-line rate is 2. A plant asset purchased for $638,000 at the beginning of the year has an estimated life of 5 years and a residual value of $58,000. Depreciation for the third year, determined by the sum-of-the-years'-digits method is $ A plant asset with...
A machine was purchased on January 1 for $100,000. The machine has an estimated useful life...
A machine was purchased on January 1 for $100,000. The machine has an estimated useful life of 4 years with a salvage value of $10,000. Under the straight-line method, accumulated depreciation at the end of year 2 is:
A company purchased equipment for $400,000 which was estimated to have a useful life of 14...
A company purchased equipment for $400,000 which was estimated to have a useful life of 14 years with a salvage or residual value of $22,000 at the end of that time. Depreciation has been recorded for 2 years on a straight-line basis. In 2020 (year 3), it is determined that the total estimated life should be 17 years with a residual or salvage value of $16,000 at the end of that time. What is the net book value a the...
Your Company purchased a machine with an estimated useful life of 8 years. The machine will...
Your Company purchased a machine with an estimated useful life of 8 years. The machine will generate cash inflows of $96,000 each year. The salvage value at the end of the project is $80,000. Your Company's discount rate is 6%. The net present value of the investment is ($7,500). What is the purchase price of the machine?
a) A Company purchased equipment for RO 50,000 with an estimated useful life of 20 years....
a) A Company purchased equipment for RO 50,000 with an estimated useful life of 20 years. At the end of the 10 year, company determined that the equipment would last only 5 more years. Does this revision affect depreciation calculated previously? Yes or no, justify your answer. b) You are required to calculate the rate of depreciation and the depreciation to be charged at the end of each year by using reducing balance method for 4 years. Life of the...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT