At December 31, 2010, Rijo Corporation reported the following plant assets. Land

Question

At December 31, 2010, Rijo Corporation reported the following plant assets.


Land $5,577,000
Buildings $49,263,500
Less: Accumulated depreciation - buildings 22,493,900
26,769,600
Equipment 74,360,000
Less: Accumulated depreciation - equipment 9,295,000
65,065,000

Total plant assets $97,411,600



During 2011, the following selected cash transactions occurred.
Apr. 1 Purchased land for $4,089,800.
May 1 Sold equipment that cost $1,115,400 when purchased on January 1, 2004. The equipment was sold for $316,030.
June 1 Sold land for $3,346,200. The land cost $1,859,000.
July 1 Purchased equipment for $2,416,700.
Dec. 31 Retired equipment that cost $929,500 when purchased on December 31, 2001. No salvage value was received.

Journalize the transactions. (Hint: You may wish to set up T accounts, post beginning balances, and then post 2011 transactions.) Rijo uses straight-line depreciation for buildings and equipment. The buildings are estimated to have a 40-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. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)

Explanation / Answer

Apr. 1 Purchased land for $4,089,800.

Debit: Land 4,089,800 Credit: Cash 4,089,800

May 1 Sold equipment that cost $1,115,400 when purchased on January 1, 2004. The equipment was sold for $316,030. 115,400 – depreciation expense per year

Debit: Depreciation Expense 37,180 Credit: Accumulated depreciation – equipment 37180

Debit: Accumulated Depreciation – equipment 817,960 Crebit: Equipment 1,115,400

Debit: Cash 316,030 Credit: Gain on sale of equipment 18,590

June 1 Sold land for $3,346,200. The land cost $1,859,000.
Debit: Cash 3,346,200                                 Credit: Land 1,859,000
                                                                  Credit: Gain on sale of land 1,487,200

July 1 Purchased equipment for $2,416,700.
Debit: Equpment 2,416,700                             Credit: Cash 2,416,700

Dec. 31 Retired equipment that cost $929,500 when purchased on December 31, 2001. No salvage value was received.
Debit: Depreciation expense 92,950                      Credit: Accumulated Depreciation, Eqiupment 92,950

Debit: Accumulated Depreiation, equipment 929,500                    Credit: Equipment 929,500

If you need to combine these two, it would be:
Debit: Accumulated depreciation 836,550                                      Credit: Equipment 929,500
Debit: Depreciation expense 92,950

Hope this helps

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