In: Accounting
At December 31, 2010, Rijo Corporation reported the
following plant assets.
Land $ 3,000,000
Buildings $26,500,000
Less: Accumulated depreciation—buildings 12,100,000
14,400,000
Equipment 40,000,000
Less: Accumulated depreciation—equipment 5,000,000 35,000,000
Total plant assets $52,400,000
During 2011, the following selected cash transactions
occurred.
Apr. 1 Purchased land for $2,200,000.
May 1 Sold equipment that cost $600,000 when purchased on January
1, 2004.
The equipment was sold for $170,000.
June 1 Sold land for $1,800,000. The land cost $1,000,000.
July 1 Purchased equipment for $1,300,000.
Dec. 31 Retired equipment that cost $500,000 when purchased on
December
31, 2001. No salvage value was received.
Instructions
(a) Journalize the transactions. (Hint: You may wish to set up T
accounts, post beginning
balances, and then post 2011 transactions.) Rijo 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 sal-
vage value. Update depreciation on assets disposed of at the time
of sale or retirement.
(b) Record adjusting entries for depreciation for 2011.
(c) Prepare the plant assets section of Rijo’s balance sheet at
December 31, 2011.