Question

pter 9 - Assignment 16 1 of 2 Required information E9-2 Computing and Recording a Basket Purchase and Straight Line Depreciation (LO 9-2, LO 9-3) [The following information applies to the questions displayed below) Bridge City Consulting bought a building and the land on which it is located for $160,000 cash. The land is estimated to represent 70 percent of the purchase price. The company paid $20,000 for building renovations before it was ready for use E9-2 Part 2 Required: 2. Prepare the journal entry to record all expenditures. Assume that all transactions were for cash and they occurred at the start of the year (if no entry is required for a transaction/event, select "No Journal Entry Required in the first account field.) View transaction list Journal entry worksheet Record all expenditures for the land and buildings assuming all transactions were paid for with cash and occurred at the start of the year. Note: Enter debits before credits Transaction General Journal Debit Credit

Answer 1

Credit Requirement 1 S.No Accounts titles and Explanation 1) Land(160000*70%) Building Cash (To record the expenses) Debit $ $ 1,12,000 68,000 $ 1,80,000 S.No Accounts titles and Explanation Debit Credit 3) $ 6,350.00 Depreciation Building (To record depreciation) $ 6,350.00 Requirement 3 Straight Line Depreciation =Cost(including renovation) -salvage value Usefull life =$68,000-$9,000 =$5,900 per year

Requirement 4 Book Value of Land and Building at the end of year 2 Particulars Land Building Amount $ $ 1,12,000 56,200 Book value of building at the end of year 2 Particulars Amount 1. Begining value $ 68,000 11,800 2.depreciation for 2 year(5900*2) $ 3.Book value of building at end of year 2 $ (68000-11800) 56,200 Note: Depreciation is not charged on land since land is not depreciable asset