Question

Question p10-32a version 10. For some reason I can't copy and paste the whole question. In looking at the explanation in Chegg there were 29 steps. I am sure that isn't all just the journal entries needed??

Gretta Chung Associates survey American eating habits. The companies accounts include land, building, office equipment, and communication equipment with separate accumulated depreciation account for each asset. During 2014 Chung Completed the following transactions:

Jan. 1 Purchased office equipment, $119,000. Paid $80,000 cash and financed the

remaining with a note payable.

Apr. 1 Acquired land and communication equipment in a lump-sum purchase. Total

cost was $270,000 paid in cash. An independent appraisal valued the land at

$212,625 and the communication equipment at $70,875.

Sep. 1 Sold a building that cost $555,000 (accumulated depreciation of $255,000

through December 31 of the preceding year). Chung received $370,000 cash

from the sale of the building. Depreciation is computed on a straight-line basis.

The building has a 40-year useful life and a residual value of $75,000.

Dec. 31 Recorded depreciation as follows:

Communication equipment is depreciated by the straight-line method over a

five-year life with zero residual value.

Office equipment is depreciated using the double-declining-balance method over

five years with a $2,000 residual value.

Question: Record transactions in the journal of Gretta Chung Associates

Answer 1

Journal Entry
Date	Particulars	Dr. Amt.	Cr. Amt.
1-Jan	Office Equipment	119,000.00
	Cash		80,000.00
	Notes Payable		39,000.00
	(Record the purchase of office equipment)
1-Apr	Land	202,500.00
	Commnication Equipment	67,500.00
	Cash		270,000.00
	(Record the purchase of Land & Communication Equipment)

	Fair Value	Weights	Amount Allocated
Land	212,625	75%	202,500
Equipment	70,875	25%	67,500
	283,500		270,000

1-Sep	Depreciation Expenses	8,000.00
	Accumulated Depreciation - Building		8,000.00
	(Record the depreciation on machinery sold upto Sep-1)
	Depreciation Per Annum = ($555,000 - $75,000) / 40 Years
	Depreciation Per Annum = $12,000
	Dep. Expenses upto Sep-1 = $12,000 X 8/12 = $8,000
1-Sep	Cash	370,000.00
	Accumulated Depreciation - Building	263,000.00
	Building		555,000.00
	Gain on Sale of Building		78,000.00
	(Record the Sale of Building)
	Cost of Building	555,000.00
	Less: Accumulated Dep. - $255,000 + $8,000	263,000.00
	WDV as on Sep-1	292,000.00
	Sale Price of Building	370,000.00
	Less: WDV of Building	292,000.00
	Gain on Sale of Building	78,000.00
31-Dec	Depreciation Expenses	10,125.00
	Accumulated Depreciation - Communication Equip.		10,125.00
	(Record the depreciation on Communication Equipment)
	Dep. Per Annum - ($67,500 - $0) / 5 Years = $13,500
	Dep. Exp. - 2014 = $13,500 X 9/12 = $10,125
31-Dec	Depreciation Expenses	47,600.00
	Accumulated Depreciation - Office Equip.		47,600.00
	(Record the depreciation on Office Equipment)
	Rate of Dep Under DDBM = 2 X 20% (Rate of dep. Under Straight Line Method)
	Rate of Dep Under DDBM = 40%
	Dep. Under DDBM = $119,000 X 40% = $47,600