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In: Accounting

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.

Solutions

Expert Solution

Journal entries
Transaction ACCOUNT TITLES AND EXPLANATIONS DEBIT ($) CREDIT ($)
1 Building $50,000.00
Cash $50,000.00
(Being building purchased for cash)
2 Depreciation Expense of Building $1,000.00
Building $1,000.00
(To record depreciation on building)
Explanation
Depreciation Expense of Building = ($50,000-$10,000) / 40
                                                  = $1,000

ekkarill92 answered 3 years ago
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