Question

Exercise 10-22 The following transactions occurred during 2017, Assume that depreciation of 10% per year is charged on all machinery and 596 per year on buildings, on a straight-line basis with no estimated salvage value. Depreciation is charged for a full year on all fixed assets acquired during the year, and no depreciation is charged on fixed assets disposed of during the year Jan. 30 A building that cost $179,520 in 2000 is torn down to make room for a new building. The wrecking contractor was paid $6,936 and was permitted to keep all materials salvaged Mar. 10 Machinery that was purchased in 2010 for $21,760 is sold for $3,944 cash, f.o.b. purchaser's plant. Freight of $408 is paid on the sale of this machinery Mar. 20 A gear breaks on a machine that cost $12,240 in 2009. The gear is replaced at a cost of $2,720. The replacement does not extend the useful life of the machine but does make the machine more efficient. A special base installed for a machine in 2011 when the machine was purchased has to be replaced at a cost of $7,480 because of defective workmanship on the original base. The cost of the machinery was $19,312 in 2011. The cost of the base was $4,760, and this amount was charged to the Machinery account in 2011 One of the buildings is repainted at a cost of $9,384. It had not been painted since it was constructed in 2013 May 18 June 23 Prepare general journal entries for the transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit 1/30 3/10 5/18

Answer 1

Date	Particulars	Debit	Credit
Jan 30	Accumulated depreciation-building (1)	152,592
	Loss on disposal of plant assets	33,864
	Building		179,520
	Cash		6,936
Mar 10	Cash (3,944 - 408)	3,536
	Accumulated depreciation - Machinery (2)	15,232
	Loss on disposal of plant assets	2,992
	Machinery		21,760
Mar 20	Machinery	2,720
	Cash		2,720
May 18	Machinery	7,480
	Accumulated depreciation - Machinery (3)	2,856
	Loss on disposal of plant assets	1,904
	Cash		7,480
	Machinery		4,760
June 23	Repair and maintenance expense - building	9,384
	Cash		9,384

Working notes:

1. Accumulated depreciation-building : $179,520 * 5% * 17 = $152,592

For, 2017 - 2000 = 17 years.

2. Accumulated depreciation - Machinery: $21,760 * 10% * 7 = $15,232

For 2017 - 2010 = 7 years.

3.Accumulated depreciation - Machinery : $4,760 * 10% * 6 = $2,856

For 2017 - 2011 = 6 years.