Orange Company operates a pizza shop near USC. The business had been acquired on January 1, Year 1, at a cost of $16,000. [$ values in thousands for ease of expression.] This price included the land, building and equipment. Orange started operations on April 1, Year 1.
The cost basis of the land was properly determined to be $6,000. The cost basis of the building and equipment were properly determined to be $7,000 and $3,000, respectively. Orange properly uses the straight-line depreciation method for the building and the double-declining balance method for the equipment in its financial accounting records. The estimated economic lives of the building and the equipment are 25 years and 10 years, respectively. The estimated salvage values of the building and the equipment are $3,000 and $200, respectively.
On January 1, Year 4, before any depreciation was recorded for Year 4, Orange accepted a cash offer and sold the property for $21,000 that same day. The sale price of $21,000 was properly allocated to land, building and equipment, respectively, as follows: $7,500, $12,500 and $1,000.
Assume all accounting for depreciation had been properly done in Years 1, 2 and 3.
Required:
Determine the proper journal entry Orange would record from the sale of the Land?
Determine the proper journal entry Orange would record from the sale of the Building?
Determine the proper journal entry Orange would record from the sale of the Equipment?
Account Titles | Debit | Credit |
Cash | 7500 | |
Gain on sale of Land | 1500 | |
Land | 6000 | |
(To record sale of Land) | ||
Cash | 12500 | |
Accumulated Depreciation = (7000 - 3000)/25 x 3 years | 480 | |
Gain on sale of Building(balancing) | 5980 | |
Building | 7000 | |
(To record sale of Building) | ||
Cash | 1000 | |
Accumulated Depreciation (calculated below) | 1464 | |
Loss on sale of Equipment (balancing) | 536 | |
Equipment | 3000 | |
(To record sale of Equipment) | ||
Orange Company operates a pizza shop near USC. The business had been acquired on January 1,...
QUESTION 6 Merle Company operates a skateboard repair shop near USC. Merle purchased this business on January 1, Year 1, at a cost of $28,000. [$ values in thousands for ease of expression.] This price included the land, building and equipment. Merle started operations on August 1, Year 1. The cost basis of the land was properly determined to be $12,000. The cost basis of the building and equipment were properly determined to be $11,000 and $5,000, respectively. Merle properly uses the double-declining balance depreciation method...
Togo's Sandwich Shop had the following long-term asset balances as of January 1, 2021: Accumulated Cost Depreciation Book Value Land $ 79,000 − $ 79,000 Building 554,000 $ (199,440 ) 354,560 Equipment 143,600 (28,800 ) 114,800 Patent 110,000 (44,000 ) 66,000 Togo's purchased all the assets at the beginning of 2019 (3 years ago). The building is depreciated over a 10-year service life using the double-declining-balance method and estimating no residual value. The equipment is depreciated over a 9-year useful...
Problem 3. A company purchased a cooling system on January 2 for $225,000. The system had an estimated useful life of 15 years. After using the system for 13 full years, the company completed a renovation of the system at a cost of $33,000 and now expects the system to be more efficient and last 8 years beyond the original estimate. The company uses the straight-line method of depreciation. (a) Prepare the journal entry at January 3, to record the...
Wiater Company operates a small manufacturing facility. On January 1, 2018, an asset account for the company showed the following balances: Equipment Accumulated Depreciation (beginning of the year) $200,000 62,000 During the first week of January 2018, the following expenditures were incurred for repairs and maintenance: Routine maintenance and repairs on the equipment Major overhaul of the equipment that improved efficiency $ 2,450 27,000 The equipment is being depreciated on a straight-line basis over an estimated life of 15 years...
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Sheridan Company owns equipment that cost $72,000 when purchased on January 1, 2019. It has been depreciated using the straight-line method based on an estimated salvage value of $12,000 and an estimated useful life of 5 years. Prepare Sheridan Company's journal entries to record the sale of the equipment in these four independent situations. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the...
Exercise 9-11
Sheridan Company owns equipment that cost $79,000 when purchased
on January 1, 2019. It has been depreciated using the straight-line
method based on an estimated salvage value of $19,000 and an
estimated useful life of 5 years.
Prepare Sheridan Company’s journal entries to record the sale of
the equipment in these four independent situations.
(Credit account titles are automatically indented when
amount is entered. Do not indent manually. If no entry is required,
select "No Entry" for the...
Required Parts 1-3 Please!
Wiater Company operates a small manufacturing facility. On January 1, 2018, an asset account for the company showed the following balances: Equipment Accumulated Depreciation (beginning of the year) $250,000 172250 During the first week of January 2018, the following expenditures were incurred for repairs and maintenance: 750 Routine maintenance and repairs on the equipment Major overhaul of the equipment that improved efficiency 33,000 The equipment is being depreciated on a straight-line basis over an estimated life...
Sale of Plant Asset Shannon Company has a equipment that originally cost $68,000. Depreciation has been recorded for six years using the straight-line method, with a $9,000 estimated salvage value at the end of an expected eight-year life. After recording depreciation at the end of six years, Shannon sells the equipment. Prepare the journal entry to record the equipment's sale for (Round to the nearest dollar): a. $30,000 cash b. $23,750 cash c. $21,000 cash General Journal Description Date Debit...
Sale of Plant Asset Shannon Company has a equipment that originally cost $68,000. Depreciation has been recorded for six years using the straight-line method, with a $9,000 estimated salvage value at the end of an expected eight-year life. After recording depreciation at the end of six years, Shannon sells the equipment. Prepare the journal entry to record the equipment's sale for (Round to the nearest dollar): a. $30,000 cash b. $23,750 cash c. $21,000 cash General Journal Credit Debit Date...
Solich Sandwich Shop had the following long-term asset balances as of December 31, 2021: Accumulated Depreciation Land Building Equipment Patent Cost $ 83,000 448,000 250,000 190,000 $(85, 120) (47, 600) (76, 000) Book Value $ 83,000 362, 880 202, 400 114,000 Solich purchased all the assets at the beginning of 2019 (3 years ago). The building is depreciated over a 20-year service life using the double-declining-balance method and estimating no residual value. The equipment is depreciated over a 10- year...