P10.5A (LO 2, 3, 5) At December 31, 2020, Grand Company reported the following as plant…
The following solution is suggested to handle the subject “P10.5A (LO 2, 3, 5) At December 31, 2020, Grand Company reported the following as plant…“. Let’s keep an eye on the content below!
Question “P10.5A (LO 2, 3, 5) At December 31, 2020, Grand Company reported the following as plant…”
P10.5A (LO 2, 3, 5) At December 31, 2020, Grand Company reported
the following as plant assets.
Journalize a series of equipment transactions related to purchase,
sale, retirement, and depreciation.
Land
  
  
$ 4,000,000
Buildings
$28,500,000
Less: Accumulated depreciation—buildings
 12,100,000
16,400,000
Equipment
48,000,000
Less: Accumulated depreciation—equipment
  5,000,000
 43,000,000
  Total plant assets
$63,400,000
During 2021, 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,
2017. The equipment was sold for $450,000.
June  1
Sold land purchased on June 1, 2011 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,
2011. 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 2021.
Depreciation Expense—Buildings $570,000; Equipment $4,800,000
c. Prepare the plant assets section of Grand’s balance sheet at
December 31, 2021.
Total plant assets $61,760,000
Answer
(a) | |||
Date | Account | Debit | Credit |
April 1 | Land | 2,130,000 | |
Cash | 2,130,000 | ||
May 1 | Depreciation expense | 25,000 | |
Accumulated Depreciation – Equipment | 25,000 | ||
(750,000/10 Years x 4/12) | |||
May 1 | Cash | 450,000 | |
Accumulated Depreciation – Equipment | 325,000 | ||
Equipment | 750,000 | ||
Sale | 25,000 | ||
June 1 | Cash | 1,500,000 | |
Land | 400,000 | ||
Disposal | 1,100,000 | ||
July 1 | Equipment | 2,500,000 | |
Cash | 2,500,000 | ||
Dec 31 | Depreciation expense | 50,000 | |
Accumulated Depreciation – Equipment | 50,000 | ||
Dec 31 | Accumulated Depreciation – Equipment | 500,000 | |
Equipment | 500,000 | ||
(b) | |||
Date | Account | Debit | Credit |
Dec 31 | Depreciation expense | 570,000 | |
Accumulated Depreciation – Equipment | 570,000 | ||
Dec 31 | Depreciation expense | 4,800,000 | |
Accumulated Depreciation – Building | 4,800,000 | ||
(c) | |||
GRAND COMPANY | |||
Partial Balance Sheet | |||
December 31, 2018 | |||
Plant Assets | |||
Land | 5,730,000 | ||
Buildings | 28,500,000 | ||
Less: Accumulated depreciation -buildings | 12,670,000 | 15,830,000 | |
Equipment | 49,250,000 | ||
Less: Accumulated depreciation -equipment | 9,050,000 | 40,200,000 | |
Total plant assets | 61,760,000 | ||
Conclusion
Above is the solution for “P10.5A (LO 2, 3, 5) At December 31, 2020, Grand Company reported the following as plant…“. We hope that you find a good answer and gain the knowledge about this topic of business.