Question

Problem 9-5A At December 31, 2017, Grand Company reported the following as plant assets. Land $ 3,770,000 Buildings $27,290,000 Less: Accumulated depreciation—buildings 12,170,000 15,120,000 Equipment 48,020,000 Less: Accumulated depreciation—equipment 4,550,000 43,470,000 Total plant assets $62,360,000 During 2018, the following selected cash transactions occurred. April 1 Purchased land for $2,190,000. May 1 Sold equipment that cost $900,000 when purchased on January 1, 2014. The equipment was sold for $540,000. June 1 Sold land purchased on June 1, 2008 for $1,540,000. The land cost $394,000. July 1 Purchased equipment for $2,530,000. Dec. 31 Retired equipment that cost $491,000 when purchased on December 31, 2008. The company received no proceeds related to salvage. Journalize the above transactions. The company uses straight-line depreciation for buildings and equipment. The buildings are estimated to have a 50-year 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. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit (To record depreciation) May 1 (To record sale of equipment) (To record depreciation) (To record retirement of equipment) Show List of Accounts Link to Text Link to Text Link to Text Record adjusting entries for depreciation for 2018. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit (To record building depreciation) (To record equipment depreciation) Show List of Accounts Link to Text Link to Text Link to Text Prepare the plant assets section of Grand’s balance sheet at December 31, 2018. (List Plant Assets in order of Land, Buildings and Equipment.) GRAND COMPANY Balance Sheet (Partial) $ $ : : $

Answer 1

April 1 Land..............21,90,000

Cash..........................................21,90,000

May 1 Depreciation expense..........................30,000

Accumulated depreciation-Equipment.............................30,000

(9,00,000x1/10x4/12)

May 1 Cash....................................................................5,40,000

Accumulated depreciation-equipment.................3,90,000

Equipment........................................................9,00,000

Gain on disposal...............................................30,000

Cost 9,00,000

Less:Accumulated depreciation 3,90,000

Book value 5,10,000

Less: Cash sale 5,40,000

Profit 30,000

June 1 Cash..........................................15,40,000

Land...........................................................3,94,000

Gain on disposal........................................11,46,000

July 1 Equipment............................................25,30,000

Cash........................................................................25,30,000

Dec 31 Depreciation expense..............................49100

Accumulated depreciation-equipment............................49100

(4,91,000 x 1/10)

Dec 31 Accumulated depreciation-equipment..................4,91,000

Equipment................................................................4,91,000

Cost 4,91,000

Less: Accumulated depreciation 0

(4,91,000x1/10x10)

Book value 0

(B) Dec 31 Depreciation expense...........................................5,45,800

Accumulated depreciation-building......................................5,45,800

(2,72,90,000 x 1/50)

Dec 31 Depreciation expense....................45,36,400

Accumulated depreciation- equipment...........45,36,400

[46629000 x 1/10 = 4662900

[2530000 x 1/10 x 6/12=126500

4536400

GRAND COMPANY

PARTIAL BALANCESHEET
DECEMBER 31, 2018

Plant Assets:

Land 566000

Building 27290000

Less: Accumulated depreiation 12715800

20140200

Equipment 49159000

Less: Accumulated depreciation 8284100

40874900

Total plant asset 61015100

Land

Building

Bal    27290000 Bal 27290000

Accumulated depreciation

Bal     12170000 Dec 31 adj 545800 Bal 2715800