Question

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

Land				$ 4,068,000 (credit)
Buildings		$ 26,680,000 (debit)
Less: Accumulated depreciation—buildings		16,170,300 (debit)		10,509,700 (credit)
Equipment		54,240,000 (debit)
Less: Accumulated depreciation—equipment		6,780,000 (debit)		47,460,000 (credit)
Total plant assets				$ 62,037,700 (credit)

During 2018, the following selected cash transactions occurred.

Apr.	1		Purchased land for $ 2,983,200.
May	1		Sold equipment that cost $ 813,600 when purchased on January 1, 2011. The equipment was sold for $ 230,520.
June	1		Sold land for $ 2,169,600. The land cost $ 1,356,000.
July	1		Purchased equipment for $ 1,491,600.
Dec.	31		Retired equipment that cost $ 949,200 when purchased on December 31, 2008. No salvage value was received.

1) Journalize the transactions. Concord 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

2) Record adjusting entries for depreciation for 2018.

3) Prepare the plant assets section of Concord’s balance sheet at December 31, 2018.

Answer 1

1) . Following will be the journal entries during 2018 :-

Date	accounts title	debit	credit
Apr .1	Land To cash (To land purchased)	2983200	2983200
May 1	Depreciation (note 1) To accumulated depreciation-equipment (TO accumulated dep. Recorded)	27120	27120
May 1	cash Accumulated depreciation - equipment To equipment To gain on sale of equipment (TO equipment sold)	230520 596640	813600 13560
June 1	cash To land To gain in sale of land (To land sold)	2169600	1356000 813600
July 1	equipment To cash (To equipment purchased)	1491600	1491600
DEC 31	depreciation To accumulated depreciation - equipment (To dep. Provided on equipment before retiring it)	94920	94920
Dec 31	accumulated depreciation To equipment (To equipment retired)	949200	949200

Note :-

Deprivation to be charged on assets sold may 1 =( 813600/10)x4/12 = $27120.

2. First of all we will calculate depreciation for the period :-

3 Building : 26680000/40 = 667000

4 Equipment balance :-

Previously held& held till end of year :-

Opening balance . 54240000

Sold on may 1 (813600)

Retired on Dec 31 . (949200)

Total closing balance .52477200

Depreciation on above balance = 52477200/10 = 5247720.(a)

Newly purchased equipment = 1491600

Depreciation for the half year ,= (1491600/10)x6/12 = 74580 (b)

Total depreciation in equipment (a+b) = $5322300.

Adjusting journal entry for recording depreciation

Date	account title	debit	credit
Dec. 31	Depreciation To accumulated depreciation - building (see note 3 above)	667000	667000
Dec 31	depreciation To accumulated depreciation (see note 4 above) (To depreciation on equipment recorded)	5322300	5322300

3) .Plant asset section of balance sheet will be as as follows

Land (note 5)		$5695200
Buildings	26680000
Less : accumulated depreciation - building	$16837300	9842700
Equipment (52477200+1491600)	53968800
Accumulated depreciation - equipment	7678500	46290300
Total plant assets		$61828200

Note :-

5. Land balance

Beginning balance. 4068000

Pur. On Apr 1 2983200

Sold land costing on June 1 . (1356000)

Land closing balance. $ 5695200

6. Accumulated dep. Bal.of building

Begi Ning balance . 16170300

Dep. For the year. 667000

Closing balance of acc. dep. $16837300

7. Accumulated depreciation- equipment

Date	particulars	debit	date	particulars	credit
Mau 1	to equipment	596640	jan 1	by bal b/d	6780000
Dec 31	to equipment	949200	may 1	by dep.	27120
Dec 31	to bal c/d	7678500	Dec 31	by dep.	94920
			Dec 31	by dep	5322300