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 1 week ago
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