Question

Problem 9-2A (Part Level Submission)

At December 31, 2017, Bridgeport Corporation reported the following plant assets.

Land				$ 5,673,000
Buildings		$26,540,000
Less: Accumulated depreciation—buildings		22,550,175		3,989,825
Equipment		75,640,000
Less: Accumulated depreciation—equipment		9,455,000		66,185,000
Total plant assets				$75,847,825

During 2018, the following selected cash transactions occurred.

Apr.	1		Purchased land for $4,160,200.
May	1		Sold equipment that cost $1,134,600 when purchased on January 1, 2011. The equipment was sold for $321,470.
June	1		Sold land for $3,025,600. The land cost $1,891,000.
July	1		Purchased equipment for $2,080,100.
Dec.	31		Retired equipment that cost $1,323,700 when purchased on December 31, 2008. No salvage value was received.

Journalize the transactions. Bridgeport 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.

Answer 1

Journal Entries:
Date	Account Titles and Explanations	Debit	Credit
April. 1	Land	$4,160,200
	Cash		$4,160,200
	(To record the purchase of land by cash)
May. 1	Depreciation Expense ($1,134,600/10 years*4/12 months)	$37,820
	Accumulated Depreciation-Equipment		$37,820
	(To record the depreciation on equipment sold)
	Cash	$321,470
	Accumulated Depreciation-Equipment [($1,134,600/10*7 years) + $37,820]	$832,040
	Equipment		$1,134,600
	Gain on Disposal of Plant Assets ($321,470 + $832,040 - $1,134,600)		$18,910
	(To record the sale of equipment for cash at gain)
June. 1,	Cash	$3,025,600
	Land		$1,891,000
	Gain on Disposal of Plant Assets ($3,025,600 - $1,891,000)		$1,134,600
	(To record the sale of land with gain for cash)
July. 1,	Equipment	$2,080,100
	Cash		$2,080,100
	(To record the purchase of equipment for cash)
Dec. 31,	Depreciation Expense ($1,323,700/10 years*1 year)	$132,370
	Accumulated Depreciation-Equipment		$132,370
	(To record the depreciation for 2018 on equipment retired)
	Accumulated Depreciation-Equipment ($1,323,700/10 years * 10 years)	$1,323,700
	Equipment		$1,323,700
	(To record the retirement of equipment after 10 years of use)
Dec. 31,	Depreciation Expense ($26,540,000/40 years)	$663,500
	Accumulated Depreciation-Buildings		$663,500
	(To record the depreciation on buildings for 2018)
Dec. 31,	Depreciation Expense ($75,640,000 - $1,134,600 + $2,080,100 - $1,323,700 = $75,261,800/10 years * 1 year)	$7,526,180
	Accumulated Depreciation-Equipment		$7,526,180
	(To record the depreciation on equipment for 2018)