Question

Question 1 At January 1, 2017, Blossom Company reported the fallowing property, plant, and equipment accounts: Accumulated depreciation-buildings $60.950,000 Accumulated depreciation-equipment 52,850,000 Buildings 97,300,000 Equipment 150,200,000 Land 24,000,000 The company uses straight-li ne depreciation for buildings and equipment, s estimated to havea year-end is December 31, and it makes adjusting entries annually. The buildings are estimated to have a 40-year useful life and no salvage value; the equipment 10-vear useful life and no salvace value During 2017, the following selected transactions occurred. Purchased land for $5.00 million. Pald $1.250 mil lion cash and Issued a 3-year, 6% note payable for the balance. Interest on the note payable annually each April 1 Apr. 1 2 million when originally purchased on January 1, 2009. the balance, The land cost $1. May 1 Sold equipment for $240,000 cash. The equipment cost $3. Sald land for s4.38 millian. Received s750,000 cash and accepted a 3-year, 5 % nate June: 0 million when purchased on June 1, 2011. Interest nthe note is due annually each June 1 July 1 Purchased equipment for $2. million cash. million when purchased on December 31, 2007. No proceeds were received Dec. 31 Retired equipment that cost Record the above transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry amounts.) Account Titles and Explanation Date Debit Credit (To record depreciation expense) May 1 (To record sale of equipment) June 1 (To record depreciation expense) (To record disposal of equipment) Record any adjusting entries required at December 31. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31 o record depreciation expense for buildings) Dec. 31 (To record depreciation expense f equipment) Dec. 31 (To record interest incurred but not yet paid) Dec. 31 (To record interest accrued but not yet received) Prepare the property, plant, and equipment section of the company's statement of financial position at December 31. (List Property, Plant and Equipment in order of Land, Buildings and Equipment.) SUNLAND COMPANY Statement of Financial Position (Partial)

Answer 1

Requirement a: Account Title and Explanation Date Debit Credit Apr-01 Land 5000000 Cash 1250000 Mortgage Payable [To record the land purchase] May-01 Depreciation Expense 3750000 124000 Accumulated Depreciation--Equipment [To record the Depreciation] 124000 ($3,720,000 10 x 4/12 $124,000) = May-01 Cash 240000 Accumulated Depreciation-Equipment Loss on 3100000 Disposal Equipment [To record the sale of equipment] 380000 3720000 3720000 Cost 3100000 [($3,720,000 Accumulated depreciation-equipment Carrying amount Cash proceeds 10) x 8 +$124,000)] 620000 240000 Loss on disposal 380000

Account Title and Explanation Date Debit Credit Jun-01 Cash Notes receivables 750000 3630000 Land 1300000 Gain on Disposal 3080000 [To record the sale of land] Jul-01 Equipment 2300000 Cash 2300000 [To record the purchase of equipment] Dec-31 Depreciation Expense ($1,000,000 10 $100,000) 100000 Accumulated Depreciation-Equipment [To record the Depreciation] Dec-31 Accumulated Depreciation-Equipment 100000 1000000 Equipment [To record the equipment write off] 1000000

Requirement b: Account Title and Explanation Credit Date Debit Dec-31 Depreciation Expense 2432500 |($97,300,000 40 = $2,432,500) Accumulated Depreciation-Buildings [To record the Depreciation] 2432500 Dec-31 Depreciation Expense 14663000 Accumulated Depreciation-Equipment [To record the Depreciation] 14663000 $145,480,000* 10 $2,300,000 10 x 6/12 $14,548,000 1,15,000 S14,663.000 $150,200,000- $3,720,000 $1,000,000 $145,480,000 =

Account Title and Explanation Date Debit Credit Dec-31 Interest Expense ($3,750,000 x 6% x 9/12 $168,750) 168750 X Interest Payable {To record the Interest Exp.] 168750 Dec-31 Interest receivable 105875 105875 ($3,630,000 x 5% x 7/12 Interest Revenue $105,875) [To record the interest revenue Sunland Company Statement of Financial Position (Partial) December 31, 2017 |Property, plant, and equipment Land 27700000 Buildings Less: Accumulated depreciation 97300000 63382500 33917500 Equipment Less: Accumulated depreciation Total property, plant, and equipment 147780000 84143000 63637000 145760500