Problem 9-5A At December 31, 2017, Grand Company reported the following as plant
ID: 340740 • Letter: P
Question
Problem 9-5A At December 31, 2017, Grand Company reported the following as plant assets. Land $ 3,770,000 Buildings $27,290,000 Less: Accumulated depreciation—buildings 12,170,000 15,120,000 Equipment 48,020,000 Less: Accumulated depreciation—equipment 4,550,000 43,470,000 Total plant assets $62,360,000 During 2018, the following selected cash transactions occurred. April 1 Purchased land for $2,190,000. May 1 Sold equipment that cost $900,000 when purchased on January 1, 2014. The equipment was sold for $540,000. June 1 Sold land purchased on June 1, 2008 for $1,540,000. The land cost $394,000. July 1 Purchased equipment for $2,530,000. Dec. 31 Retired equipment that cost $491,000 when purchased on December 31, 2008. The company received no proceeds related to salvage. 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.) Date Account Titles and Explanation Debit Credit (To record depreciation) May 1 (To record sale of equipment) (To record depreciation) (To record retirement of equipment) Show List of Accounts Link to Text Link to Text Link to Text 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.) Date Account Titles and Explanation Debit Credit (To record building depreciation) (To record equipment depreciation) Show List of Accounts Link to Text Link to Text Link to Text Prepare the plant assets section of Grand’s balance sheet at December 31, 2018. (List Plant Assets in order of Land, Buildings and Equipment.) GRAND COMPANY Balance Sheet (Partial) $ $ : : $
Explanation / Answer
April 1 Land..............21,90,000
Cash..........................................21,90,000
May 1 Depreciation expense..........................30,000
Accumulated depreciation-Equipment.............................30,000
(9,00,000x1/10x4/12)
May 1 Cash....................................................................5,40,000
Accumulated depreciation-equipment.................3,90,000
Equipment........................................................9,00,000
Gain on disposal...............................................30,000
Cost 9,00,000
Less:Accumulated depreciation 3,90,000
Book value 5,10,000
Less: Cash sale 5,40,000
Profit 30,000
June 1 Cash..........................................15,40,000
Land...........................................................3,94,000
Gain on disposal........................................11,46,000
July 1 Equipment............................................25,30,000
Cash........................................................................25,30,000
Dec 31 Depreciation expense..............................49100
Accumulated depreciation-equipment............................49100
(4,91,000 x 1/10)
Dec 31 Accumulated depreciation-equipment..................4,91,000
Equipment................................................................4,91,000
Cost 4,91,000
Less: Accumulated depreciation 0
(4,91,000x1/10x10)
Book value 0
(B) Dec 31 Depreciation expense...........................................5,45,800
Accumulated depreciation-building......................................5,45,800
(2,72,90,000 x 1/50)
Dec 31 Depreciation expense....................45,36,400
Accumulated depreciation- equipment...........45,36,400
[46629000 x 1/10 = 4662900
[2530000 x 1/10 x 6/12=126500
4536400
GRAND COMPANY
PARTIAL BALANCESHEET
DECEMBER 31, 2018
Plant Assets:
Land 566000
Building 27290000
Less: Accumulated depreiation 12715800
20140200
Equipment 49159000
Less: Accumulated depreciation 8284100
40874900
Total plant asset 61015100
Land
Building
Bal 27290000
Bal 27290000
Accumulated depreciation
Bal 12170000
Dec 31 adj 545800
Bal 2715800
Bal 27290000
Bal 27290000
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