The following transactions occurred during 2014. Assume that depreciation of 10%
ID: 2444516 • Letter: T
Question
The following transactions occurred during 2014. Assume that depreciation of 10% per year is charged on all machinery and 5% per year on buildings, on a straight-line basis, with no estimated salvage value. Depreciation is charged for a full year on all fixed assets acquired during the year, and no depreciation is charged on fixed assets disposed of during the year.
Prepare general journal entries for the transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. 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
1/30
3/10
3/20
5/18
6/23
Jan. 30 A building that cost $340,560 in 1997 is torn down to make room for a new building. The wrecking contractor was paid $13,158 and was permitted to keep all materials salvaged. Mar. 10 Machinery that was purchased in 2007 for $41,280 is sold for $7,482 cash, f.o.b. purchaser’s plant. Freight of $774 is paid on the sale of this machinery. Mar. 20 A gear breaks on a machine that cost $23,220 in 2009. The gear is replaced at a cost of $5,160. The replacement does not extend the useful life of the machine but does make the machine more efficient. May 18 A special base installed for a machine in 2008 when the machine was purchased has to be replaced at a cost of $14,190 because of defective workmanship on the original base. The cost of the machinery was $36,636 in 2008. The cost of the base was $9,030, and this amount was charged to the Machinery account in 2008. June 23 One of the buildings is repainted at a cost of $17,802. It had not been painted since it was constructed in 2010.Explanation / Answer
Balance Sheet
Income Statement
Transaction
Cash Asset
+
Noncash Assets
=
Liabil-
ities
+
Contrib. Capital
+
Earned
Capital
Rev-enues
–
Expen-ses
=
Net
Income
+6,000
+36,000
(Equipment)
=
+42,000
(Common
stock)
–
=
-1,380
+1,200
(Supplies)
=
-180
(Retained
earnings)
–
+180
(Phone
expense)
=
-180
+2,300
(Equipment)
=
+2,300
(AP)
–
=
+400
=
+400
(Retained
earnings)
+400
(Sales)
–
=
+400
+265
=
+265
(Unearned revenue)
–
=
-2,000
+2,000
(Equipment)
=
–
=
-1,500
=
-1,500
(Retained
earnings)
–
+1,500
(Wages
exp.)
=
-1,500
+2,650
=
+2,650
(Retained
earnings)
+2,650
(Sales)
–
=
+2,650
-2,100
=
-2,100
(AP)
–
=
-800
(Supplies)
=
-800
(Retained earnings)
–
+800
(Supplies exp.)
=
8400
-1,000
(Equipment)
=
-1,000
(Retained earnings)
–
+1,000
(Depr’n exp.)
=
-1,000
=
+50
(Wages payable)
-50
(Retained earnings)
–
+50
(Wages exp.)
=
-50
=
+600
(Rent payable)
-600
(Retained earnings)
–
+600
(Rent exp.)
=
-600
Balance Sheet
Income Statement
Transaction
Cash Asset
+
Noncash Assets
=
Liabil-
ities
+
Contrib. Capital
+
Earned
Capital
Rev-enues
–
Expen-ses
=
Net
Income
+6,000
+36,000
(Equipment)
=
+42,000
(Common
stock)
–
=
-1,380
+1,200
(Supplies)
=
-180
(Retained
earnings)
–
+180
(Phone
expense)
=
-180
+2,300
(Equipment)
=
+2,300
(AP)
–
=
+400
=
+400
(Retained
earnings)
+400
(Sales)
–
=
+400
+265
=
+265
(Unearned revenue)
–
=
-2,000
+2,000
(Equipment)
=
–
=
-1,500
=
-1,500
(Retained
earnings)
–
+1,500
(Wages
exp.)
=
-1,500
+2,650
=
+2,650
(Retained
earnings)
+2,650
(Sales)
–
=
+2,650
-2,100
=
-2,100
(AP)
–
=
-800
(Supplies)
=
-800
(Retained earnings)
–
+800
(Supplies exp.)
=
8400
-1,000
(Equipment)
=
-1,000
(Retained earnings)
–
+1,000
(Depr’n exp.)
=
-1,000
=
+50
(Wages payable)
-50
(Retained earnings)
–
+50
(Wages exp.)
=
-50
=
+600
(Rent payable)
-600
(Retained earnings)
–
+600
(Rent exp.)
=
-600
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