Question

Endblast Productions showed the following selected asset balances on December 31, 2017:

Land	$	440,800
Building		570,400
Accumulated depreciation, building1		411,200
Equipment		193,200
Accumulated depreciation, equipment2		84,000

¹Remaining estimated useful life is eight years with a residual value of $20,000; depreciated using the straight-line method to the nearest whole month.
²Total estimated useful life is 10 years with a residual value of $24,000; depreciated using the double-declining-balance method to the nearest whole month.

Required:
Prepare the entries for each of the following. (Round intermediate calculations to the nearest whole dollar.)

1. The land and building were sold on September 27, 2018, for $614,000 cash. (If no entry is required for a transaction, select "No journal entry required" in the first account field.)

1. Record the building depreciation for 2018.

2. Record the sale of land and building.

2. The equipment was sold on November 2, 2018, for $57,900 cash. (If no entry is required for a transaction, select "No journal entry required" in the first account field.)

1. Record the equipment depreciation for 2018.

2. Record the sale of equipment.

Answer 1

1	Account	Debit	Credit
1	Depreciation expense building	13,050
	Accumulated depreciation building		13,050
2	Accumulated depreciation building	4,24,250
	Cash	6,14,000
	Land		4,40,800
	Building		5,70,400
	Gain on sale of land and building		27,050
2
1	Depreciation expense equipment	7,100
	Accumulated depreciation equipment		7,100
2	Accumulated depreciation equipment	91,100
	Cash	57,900
	Land		-
	Equipment		1,93,200
	Loss on sale of equipment	44,200	-

workings:

Building net book value			Equipment net book value
Cost	5,70,400		Cost	1,93,200
Less AD	4,11,200		Less AD	84,000
Net book value	1,59,200		Net book value	1,09,200
Less salvage value	20,000		Less salvage value	24,000
Depreciation base	1,39,200		Depreciation base	85,200
Useful life	8		Useful life	10
Depreciation per year	17,400		Depreciation per year	8,520
Depreciation per month	1,450		Depreciation per month	710
Depreciation for 9 months	13,050		Depreciation for 10 months	7,100
Net book value on Sep 27	1,46,150		Net book value on Nov	1,02,100
Add Land cost	4,40,800
Total book value	5,86,950
Sale proceeds	6,14,000		Sale proceeds	57,900
Less book value	5,86,950		Less book value	1,02,100
Gain on sale	27,050		Loss on sale	-44,200