Question

At December 31, 2010, Rijo Corporation reported the following plant assets.


Land $3,000,000
Buildings $26,500,000
Less: Accumulated depreciation - buildings

12,100,000
14,400,000
Equipment 40,000,000
Less: Accumulated depreciation - equipment

5,000,000


35,000,000
Total plant assets

$52,400,000

During 2011, the following selected cash transactions occurred.

Apr. 1 Purchased land for $2,200,000.
May 1 Sold equipment that cost $600,000 when purchased on January 1, 2004. The equipment was sold for $170,000.
June 1 Sold land for $1,800,000. The land cost $1,000,000.
July 1 Purchased equipment for $1,300,000.
Dec. 31 Retired equipment that cost $500,000 when purchased on December 31, 2001. No salvage value was received.

Answer 1

Apr. 1 Purchased land for $3,509,000
Dr Land $3,509,000
Cr Cash $3,509,000

May 1 Sold equipment that cost $957,000 when purchased on January 1, 2004. The equipment was sold for $271,150
Dr Depreciation 31,900 (957,000/10 x 4/12)
Cr Accum depn 31,900

Dr Accum depn 701,800 (957,000/10 x 7 plus 31,900)
Dr Cash 271,150
Cr Equipment 957,000
Cr Gain on sale of equipment 15,950

June 1 Sold land for $2,871,000. The land cost $1,595,000
Dr Cash 2,871,000
Cr Land 1,595,000
Cr Gain on sale of land 1,276,000

July 1 Purchased equipment for $2,073,500
Dr Equipment 2,073,500
Cr Cash 2,073,500

Dec. 31 Retired equipment that cost $797,500 when purchased on December 31, 2001. No salvage value was received
Dr Depreciation 79,750 (for the 10th and last yr)
Cr Accum depn 79,750

Dr Accum depn 797,500
Cr Equipment 797,500 (no gain or loss on retirement)

Record adjusting entries for depreciation for 2011.

Date Account/Description Debit Credit
Dec. 31 Depreciation expense 1,056,688 (42,267,500/40 rounded to nearest $)
Accumulated depreciation - buildings 1,056,688
(To record depreciation on buildings.)

Dec. 31 Depreciation expense 6,411,900
Accumulated depreciation - equipment 6,411,900
(To record depreciation on equipment.)

RIJO CORPORATION
Partial Balance Sheet

December 31, 2011
Plant Assets
Land $6,699,000
Buildings $42,267,500
Less: Accumulated depreciation - buildings 20,356,188

Equipment 64,119,000
Less: Accumulated depreciation - equipment 12,999,250

Total plant assets 79,730,062

Answer 2

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