P10-5AthruP10-7A_P10-9A C-Wyckoff.docx

P10-5AthruP10-7A_P10-9A C-Wyckoff.docx - Problems P10-5A...

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Problems P10-5A thru P10-7A & P10-9A 10/13/2017 Charles Wyckof P10-5A At December 31, 2017, Grand Company reported the following as plant assets. During 2018, the following selected cash transactions occurred. April 1- Purchased land for $2,130,000. May 1- Sold equipment that cost $750,000 when purchased on January 1, 2014. The equipment was sold for $450,000. June 1- Sold land purchased on June 1, 2008 for $1,500,000. The land cost $400,000. July 1- Purchased equipment for $2,500,000. Dec. 31- Retired equipment that cost $500,000 when purchased on December 31, 2008. The company received no proceeds related to salvage. Instructions (a) 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. (b) Record adjusting entries for depreciation for 2018. (c) Prepare the plant assets section of Grand’s balance sheet at December 31, 2018. Apr 1 Land Exp. $2,130,000 (a) Cash $2,130,000 (land purchase) May 1 Depreciation Exp. 25,000 Accum. Deprec. - Equipment 25,000 (750,000 x 1/10 x 4/12 = 25,000) 1 Cash 450,000 Accum. Deprec. – Equipment 325,000 Equipment 750,000 Gain on Disposal of Assets 25,000 (Equipment cost 750,000 on 1/1/2014…..age 4yrs 4mo of 10yr life.
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