The following transactions occurred during 2014. Assume that depreciation of 10%

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.)

Account Titles and Explanation

Debit

Credit

1/30

3/10

3/20

5/18

6/23

Jan. 30 A building that cost $363,000 in 1997 is torn down to make room for a new building. The wrecking contractor was paid $14,025 and was permitted to keep all materials salvaged. Mar. 10 Machinery that was purchased in 2007 for $44,000 is sold for $7,975 cash, f.o.b. purchaser’s plant. Freight of $825 is paid on the sale of this machinery. Mar. 20 A gear breaks on a machine that cost $24,750 in 2009. The gear is replaced at a cost of $5,500. 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 $15,125 because of defective workmanship on the original base. The cost of the machinery was $39,050 in 2008. The cost of the base was $9,625, and this amount was charged to the Machinery account in 2008. June 23 One of the buildings is repainted at a cost of $18,975. It had not been painted since it was constructed in 2010.

Explanation / Answer

Account Titles and Explanation

Debit

Credit

1/30

3/10

3/20

5/18

6/23

date

Account Titles and Explanation

Debit

Credit

1/30

Loss on Building 54450 Cost of Erection 14025 Buildings 68475

3/10

cash 7150 Loss on Sale 5225 Freight A/c 825 Machinery 13200

3/20

Repair & Maintenance 5500 Cash 5500

5/18

Repair & Maintenance 15125 Cash 15125

6/23

Repair & Maintenance- Buildings 18975 Cash 18975

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