Question

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

Land $ 5,883,000

Buildings $26,560,000

Less: Accumulated depreciation—buildings 23,384,925 3,175,075

Equipment 78,440,000

Less: Accumulated depreciation—equipment 9,805,000 68,635,000

Total plant assets $77,693,075

During 2018, the following selected cash transactions occurred.

Apr. 1 Purchased land for $4,314,200.

May 1 Sold equipment that cost $1,176,600 when purchased on January 1, 2011. The equipment was sold for $333,370.

June 1 Sold land for $3,137,600. The land cost $1,961,000.

July 1 Purchased equipment for $2,157,100.

Dec. 31 Retired equipment that cost $1,372,700 when purchased on December 31, 2008. No salvage value was received.

Journalize the transactions. Flounder 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 the 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.)

Record adjusting entries for depreciation for 2018. (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.)

(To record depreciation on buildings.)

(To record depreciation on equipment.)

Prepare the plant assets section of Flounder’s balance sheet at December 31, 2018. (Hint: You may wish to set up T accounts, post beginning balances, and then post 2018 transactions.) (List Plant Assets in order of Land, Building and Equipment.)

FLOUNDER CORPORATION

Partial Balance Sheet

Answer 1

Journal entries to record the transactions incurred during year 2018 are as below:

Date	Particulars	L.F	Amount ($)	Amount ($)
2018
Apr-01	Land		4,314,200
	Cash			4,314,200
	(For land purchased)
May-01	Cash		333,370
	Accumulated dep-equipment		862,840
	Equipment			1,176,600
	Gain on sale of equipment			19,610
	(For equipment sold)
	1,176,600/10 =117,660 per year
	2011-2017 = 117,660*7		823620
	2018 = 117,660*4/12		39220
Jun-01	Cash		3,137,600
	Gain on sale of land			1,176,600
	Land			1,961,000
	(for land sold)
Jul-01	Equipment		2,157,100
	Cash			2,157,100
	(For equipment purchased)
Dec-31	Accumulated dep (1,372,700/10*10)		1,372,700
	Equipment			1,372,700
	(For equipment retired)

Adjusting journal entries are as shown below:

Adjusting entries recorded in December
Date	Particulars	L.F	Amount ($)	Amount ($)
2018
Dec-31	Depreciation-Building		664,000
	Accumulated dep- Building			664,000
	(For depreciation on building recorded)
	26,560,000/40
Dec-31	Depreciation- Equipment		7,696,925
	Accumulated dep- Equipment			7,696,925
	(For dep on equipment recorded)
	Old equipment (78,440,000-1,176,600-1,372,700)
	75,890,700
	new equipment 75,890,700/10 = 7,589,070
	2,157,100/10*6/12 = 107,855

Now for preparing the plant assets account first the opening balances and all the transactions during 2018 are posted to the T accounts for getting the closing balances.

T-accounts are as shown below:

Land
Particulars	Amount ($)	Particulars	Amount ($)
Jan-01	5,883,000	Jun-01	1,961,000
Apr-01	4,314,200
	10,197,200		1,961,000
Dec-31	8,236,200
Buildings
Particulars	Amount ($)	Particulars	Amount ($)
Jan-01	26,560,000
	26,560,000		26,560,000
Dec-31	26,560,000
Equipment
Particulars	Amount ($)	Particulars	Amount ($)
Jan-01	78,440,000	May-01	1,176,600
Jul-01	2,157,100	Dec-31	1,372,700
	80,597,100		2,549,300
Dec-31	78,047,800
Accumulated dep-buildings
Particulars	Amount ($)	Particulars	Amount ($)
		Jan-01	23,384,925
		Dec-31	664,000
	0		24,048,925
		Dec-31	24,048,925
Accumulated dep-equipment
Particulars	Amount ($)	Particulars	Amount ($)
May-01	862,840	Jan-01	9,805,000
Dec-31	1,372,700	Dec-31	7,696,925
	2,235,540		17,501,925
		Dec-31	15,266,385

Then the plant asset account is prepared

Plant Assets
Land		8,236,200
Buildings	26,560,000
less: accumulated dep buildings	24,048,925	2,511,075
Equipment	78,047,800
Less: Accumulated dep equipment	15,266,385	62,781,415
Total plant assets		73,528,690