P10-5A Journalize a series of equipment transactions related to purchase, sale, retirement, and depreciati

At December 31, 2017, Grand Company reported the following as plant assets.
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 2018, 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, 2014. The
equipment was sold for $450,000.
June 1 Sold land purchased on June 1, 2008 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, 2008.
No salvage value was received.

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 2018.
(c ) Prepare the plant assets section of Grand's balance sheet at December 31, 2018.

A. Grand Company
Journal Entries
Date Account titles Debit
Apr-01 Land $2,130,000
Cash

May-01 Depreciation Expense (750.000 x 1/10 x 4/12) 25,000

Accumulated Depriciation-Equipment
(4 month depreciation Jan-Apr)

Cash 450,000
Accumulated Depreciation-Equipment (750.000x4/10+25.000) 325,000
 Equipment
Gain on Disposal

Jun-01 Cash 1,500,000

Land
Gain on Disposal

Jul-01 Equipment 2,500,000

Cash

Dec-01 Depreciation Expense (500.000 x 1/10) 50,000

Accumulated Depriciation-Equipment

Accumulated Depriciation-Equipment 500,000

Equipment

B. Grand Company
Adjusting Entries
Date Account titles Debit
Dec-31 Depreciation Expense (28.500.000 x 1/50) $570,000
Accumulated decpreciation-Buildings

Depreciation expense 4,800,000

Accumulate Depreciation-Equipment
(48.000.000 - 750.000 - 500.000) x 1/10 4675000
2.500.000 x 1/10 x 6/12 125000
4800000

C. Grand Company
Balance Sheet
December 31, 2018

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 Plan Assets $61,760,000
ement, and depreciation

Credit

$2,130,000

25,000
 750,000
25,000

400,000
1,100,000

2,500,000

50,000

500,000

Credit

$570,000

4,800,000