In: Accounting
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.
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) |