Question

P10.5A (LO 2, 3, 5) At December 31, 2020, Grand Company reported the following as plant assets.
Journalize a series of equipment transactions related to purchase, sale, retirement, and depreciation.

Land
  

  
$ 4,000,000

Buildings
$28,500,000

Less: Accumulated depreciation—buildings
 12,100,000
16,400,000

Equipment
48,000,000

Less: Accumulated depreciation—equipment
  5,000,000
 43,000,000

  Total plant assets

$63,400,000

During 2021, the following selected cash transactions occurred.

April   1
 
Purchased land for $2,130,000.

May  1
Sold equipment that cost $750,000 when purchased on January 1, 2017. The equipment was sold for $450,000.

June  1
Sold land purchased on June 1, 2011 for $1,500,000. The land cost $400,000.

July   1
Purchased equipment for $2,500,000.

Dec. 31
Retired equipment that cost $500,000 when purchased on December 31, 2011. The company received no proceeds related to salvage.

Instructions

a. 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.
b. Record adjusting entries for depreciation for 2021.
Depreciation Expense—Buildings $570,000; Equipment $4,800,000
c. Prepare the plant assets section of Grand's balance sheet at December 31, 2021.
Total plant assets $61,760,000

P10.5A Financial Statement Excel (LO 2, 3, 5) At December 31, 2020, Grand Company reported the following as plant assets. Journalize a series of equipment transactions related to purchase, sale, retirement, and depreciation. $ 4,000,000 16,400,000 Land Buildings Less: Accumulated depreciation—buildings Equipment Less: Accumulated depreciation equipment Total plant assets $28,500,000 12,100,000 48,000,000 5,000,000 43,000,000 $63,400,000 During 2021, the following selected cash transactions occurred. April 1 May 1 June 1 July 1 Dec. 31 Purchased land for $2,130,000 Sold equipment that cost $750,000 when purchased on January 1, 2017. The equipment was sold for $450,000 Sold land purchased on June 1, 2011 for $1,500,000. The land cost $400,000. Purchased equipment for $2,500,000 Retired equipment that cost $500,000 when purchased on December 31, 2011. The company received no proceeds related to salvage. Instructions a. 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. b. Record adjusting entries for depreciation for 2021. Depreciation Expense-Buildings $570,000; Equipment $4,800,000 c. Prepare the plant assets section of Grand's balance sheet at December 31, 2021. Total plant assets $61,760,000

Answer 1

(a)
Date	Account	Debit	Credit
April 1	Land	2,130,000
	Cash		2,130,000
May 1	Depreciation expense	25,000
	Accumulated depreciation - Equipment		25,000
	(750,000/10 years x 4/12)
May 1	Cash	450,000
	Accumulated depreciation - Equipment	325,000
	Equipment		750,000
	Gain on Sale		25,000
June 1	Cash	1,500,000
	Land		400,000
	Gain on Disposal		1,100,000
July 1	Equipment	2,500,000
	Cash		2,500,000
Dec 31	Depreciation expense	50,000
	Accumulated depreciation - Equipment		50,000
Dec 31	Accumulated depreciation - Equipment	500,000
	Equipment		500,000
(b)
Date	Account	Debit	Credit
Dec 31	Depreciation expense	570,000
	Accumulated depreciation - Equipment		570,000
Dec 31	Depreciation expense	4,800,000
	Accumulated depreciation - Building		4,800,000
(c)
	GRAND COMPANY
	Partial Balance Sheet
	December 31, 2018
	Plant Assets
	Land		5,730,000
	Buildings	28,500,000
	Less: Accumulated depreciation -buildings	12,670,000	15,830,000
	Equipment	49,250,000
	Less: Accumulated depreciation -equipment	9,050,000	40,200,000
	Total plant assets		61,760,000