Problem 9-5A At December 31, 2017, Grand Company reported the following as plant

Question

Problem 9-5A

At December 31, 2017, Grand Company reported the following as plant assets.

During 2018, the following selected cash transactions occurred.

Retired equipment that cost $480,000 when purchased on December 31, 2008. The company received no proceeds related to salvage.

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(1) 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. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

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(2) Record adjusting entries for depreciation for 2018. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

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(3) Prepare the plant assets section of Grand’s balance sheet at December 31, 2018. (List Plant Assets in order of Land, Buildings and Equipment.)

Land $ 4,320,000 Buildings $29,800,000 Less: Accumulated depreciation—buildings 10,570,000 19,230,000 Equipment 47,520,000 Less: Accumulated depreciation—equipment 4,910,000 42,610,000     Total plant assets $66,160,000

Explanation / Answer

Journal

Partial Balance Sheet

Date Account Name Debit Credit Apr 1 Land $2000000 Cash $2000000 May 1 Depreciation expense
(840000 x 1/10 x 4/12) 28000 Accumulated depreciation-Equipment 28000 May 1 Cash 504000 Accumulated depreciation-Equipment
[(840000 x 1/10 x 4) + 28000] 364000 Equipment 840000 Gain on disposal of plant assets 28000 Jun 1 Cash 1430000 Land 393000 Gain on disposal of plant assets 1037000 Jul 1 Equipment 2440000 Cash 2440000 Dec 31 Depreciation expense
($480000 x 1/10) 48000 Accumulated depreciation-Equipment 48000 Dec 31 Accumulated depreciation-Equipment 480000 Equipment 480000 Dec 31 Depreciation expense
($29800000 x 1/50) 596000 Accumulated depreciation-Buildings 596000 Dec 31 Depreciation expense
[($47520000 - 840000 - 480000) x 1/10]
+ [$2440000 x 1/10 x 6/12] 4742000 Accumulated depreciation-Equipment 4742000

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