Question

BACK NE Question 2 At January 1, 2018, Crane Limited reported the following property Accumulated depreciation--buildings Accumulated depreciation-equipment Buildings Equipment Land $63,800,000 57,600,000 91,400,000 136,300,000 19,000,000 The company uses straight-line depreciation for buildings and equipment, its year and is December 31, and it makes adjusting entries analy. The buildings are estimated to have a 40-year se He and no residual values the equipment is estimated to have a 10 year Me and residual value During 2018, the following selected transactions occurred: Apr. May June 1 1 Purchased land for $4,700,000. Pad 51,180,000 cash and issued a three-year, 6% mortgage payable for the balance interest on the mortgage is payable anualy each April 1. Sold equipment for $290,000 cash. The equipment cost $2,791,200 when originally purchased on January 1, 2010. Sold land for $3,379,400. Received 5945,800 cash and accepted a three-year 55 note for the balance. The land cost $1,400,000 when purchased on June 1, 2012. Interest on the note is due annually each June 1. Purchased equipment for $2,200,000 cash Retired equipment that cost $1,100,000 when purchased on January 1, 2009. No proceeds were received Tested land for impairment and found that is recoverable value was $19,000,000 July 1 Dec. 31 31 Record the above transactions. (Credit account titles are automatically indeed when the amount watered De mot de manily. If no entry is required, select "No Entry for the accounties and enter for the amounts Nound answers to decal place 05.275. Hecardu let the order presented in the problem) Date Account Titles and Explanation Credit 700.000 e web and your PC

Answer 1

Credit Calculation Crane Limited Journal entries Date Account 1-Apr Land Cash Mortgage Payable Debit $ 4,700,000 $ $ 1,180,000 3,520,000 -4,700,000-1,180,000 $ 93,040 =2,791,200/10 yrs*4/12 1-May Depreciation expense Accumulated Depreciation-Equipment $ 93,040 1-May Cash Accumulated Depreciation Equipment Loss on disposal Equipment $ $ $ 290,000 2,326,000 175,200 =2,791,200/10*8 yrs+93,040 Dep from 2010-2017 for 8 yrs $ 2,791,200 $ $ 945,800 2,433,600 =3,3794,000-945,800 1-Jun Cash Notes Receivable Land Gain on disposal $ $ 1,400,000 1,979,400 $ 2,200,000 1-Jul Equipment Cash $ 2,200,000 $ 110,000 =1,100,000/10 yrs 31-Dec Depreciation expense Accumulated Depreciation-Equipment $ 110,000 $ 1,100,000 31-Dec Accumulated Depreciation Equipment Equipment $ 1,100,000 $ 3,300,000 =19,000,000+4,700,000-1,400,000- 19,000,000 $ 3,300,000 31-Dec Impairment Loss Land Adjusting entries 31-Dec Depreciation expense Accumulated Depreciation-Building $ 2,285,000 =91,400,000/40 $ 2,285,000 $ 13,350,880 31-Dec Depreciation expense Accumulated Depreciation-Equipment (136,300,000-2,791,200- 1,100,000)/10 + 2,200,000/10*6/12 $ 13,350,880 $ 158,400 31-Dec Interest expense Interest payable =3,520,000*6%*9/12 158,400 9 months from April 1 to Dec 31 $ $ 70,980 31-Dec Interest receivable Interest revenue $ =2,433,600*5%*7/12 70,980 7 months from June 1 to Dec 31

Crane Limited Balance Sheet December 31. 2018 Less Property Plant & Equipment Land Buildings Accumulated Depreciation-Buildings Equipment Accumulated Depreciation Equipment Total Property Plant & Equipment $ 19,000,000 $ 91,400,000 $ (66,085,000) $ 25,315,000 $ 134,608,800 $ (67,727,920) $ 66,880,880 $ 111,195,880 Less

Date Debit Date Credit Calculation Crane Limited T Accounts Date Debit Date Credit Land Op bal $ 19,000,000 1-Apr $ 4,700,000 1-Jun $1,400,000 31-Dec $3,300,000 Bal. $19,000,000 Equipment Op bal $136,300,000 1-Jul $ 2,200,000 1-May $2,791,200 31-Dec $1,100,000 1 Accum. Depr. - Equipment Op bal $57,600,000 -May $2,326,000 1-May $ 93,040 31-Dec $1,100,000 31-Dec $ 110,000 31-Dec $ 13,240,880 31-Dec $ 110,000 (136,300,000-2,791,200-1,100,000)/10 2,200,000/10*6/12 Bal. $134,608,800 Building $ 91,400,000 Bal. $67,727,920 Accum. Depr.- Building Op bal $63,800,000 31-Dec $ 2,285,000 Op bal =91,400,000/40 Bal. $ 91,400,000 Bal. $ 66,085,000