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(To record sale of equipment) SHOW LIST OF ACCOUNTS Problem 10-05A a-c (Video) At December 31, 2020, Pronghorn Company report

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Date Account Titles and Explanation Debit Credit
April 1 Land 2000000
Cash 2000000
May 1 Depreciation expense ($840000/10 x 4/12) 28000
Accumulated depreciation-equipment 28000
(To record depreciation)
May 1 Cash 504000
Accumulated depreciation-equipment* 364000
Gain on disposal 28000
Equipment 840000
(To record sale of equipment)
June 1 Cash 1430000
Land 393000
Gain on disposal 1037000
July 1 Equipment 2440000
Cash 2440000
Dec. 31 Depreciation expense ($480000/10) 48000
Accumulated depreciation-equipment 48000
(To record depreciation)
Dec. 31 Accumulated depreciation-equipment 480000
Equipment 480000
(To record retirement of equipment)

*Accumulated depreciation-equipment:

Annual depreciation = $840000/10 = $84000

Accumulated depreciation = ($84000 x 4) + $28000 = $364000

Date Account Titles and Explanation Debit Credit
Dec. 31 Depreciation expense ($29800000/50) 596000
Accumulated depreciation-buildings 596000
(To record building depreciation)
Dec. 31 Depreciation expense* 4742000
Accumulated depreciation-equipment 4742000
(To record equipment depreciation)

*Depreciation expense:

Depreciation on Jan. 1 balance: ($47520000 - $840000 - $480000)/10 = $46200000/10 = $4620000

Depreciation on new equipment purchased: ($2440000/10 x 6/12) = $122000

Total depreciation expense = $4620000 + $122000 = $4742000

Pronghorn Company
Balance Sheet (Partial)
December 31, 2021
Property, Plant, and Equipment
Land 5927000
Buildings 29800000
Less: Accumulated depreciation-Buildings 11166000 18634000
Equipment 48640000
Less: Accumulated depreciation-Equipment 4142000 44498000
Total property, plant, and equipment 69059000
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