Question At lanuary 1, 2017, Pharoah Company reported the following property, pl

Question

Question At lanuary 1, 2017, Pharoah Company reported the following property, plant, and equipment accounts: Accumulated depreciabon-buildngs $61,250,000 Accumulated deprecietion-equipmt 54,250,000 Buildings Equipment Land 97,300,000 150,25D,000 22,300,000 a 4D-year useful ife and no salvage value; the eqipment is astimated to have a Ihe company uses straight-line depredation far buldings and equipmant, its year-and is Drcember 31, and it makrs adjusting entries annually The huildings are estimated to hav 10-year usefu Ife and no salvage value. During 2017, the following selected transactions oocurred: Apr. 1 Purchased land for S4.4D milion. Paid $1.1DO million cash and issued a 3-year, ó% nate payable for the balance-Interest ??n th© note is payable annually each April 1. May 1 Sold equipment for $35000 cash. The equipment cost $2.64 milion when orignally purchased on lanuary 1, 2009 June 1 50 d land for $5.40 illi n Received $600,000 cash and accepted a 3 ea 5% note or the balance. Th e la o st S1 50 milion w en ur ased onJu e l 2011 Interest on the note is due annua July 1 Purchased equipment for $2.40 million cash. Dec. 31 Retred equipment that cost $1 millon when purchased on December 31, 2007. No proceeds were received. each June 1

Explanation / Answer

Requirement 1. Recording the transactions

Requirement 2 : Record the adjusting entries

Requirement 3: Property, Plant and Equipment Section as at December 31, 2017

Workings

PHAROAH COMPAY General Journal for the year ending December 31, 2017 Date Account Title Debit Credit April.1 Land 4400000 Cash 1100000 Note Payable 3300000 (Purchase of land) May.1 Depreciation Expense 88000 Accumulated Depreciation - Equipment 88000 (Depreciation expense on the equipment sold) Cash 350000 Loss on sale of equipment 90000 Accumulated Depreciation - Equipment 2200000 Equipment 2640000 (Sale of equipment ) June.1 Cash 600000 Note Receivable 4800000 Land 1500000 Gain on sale of land 3900000 (Sale of land) July.1 Equipment 2400000 Cash 2400000 (Purchase of equipment for cash) Dec.31 Acumulated Depreciation - Equipment 1000000 Equipment 1000000 (Equipment retired after full life of 10 years)

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