TUTORIAL TEST 09

Exercise 1:

At December 31, 2017, Bezone Company reported the following as plant assets.

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.

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 Bezone’s balance sheet at December 31, 2018.
Exercise 2:
During 2018, Mora Company completed the following transactions:

Jan. 1 Traded in old office equipment with book value of $55,000 (cost of $127,000 and
accumulated depreciation of $72,000) for new equipment. Mora also paid $70,000
in cash. Fair value of new equipment is $133,000. Assume the exchange had
commercial substance.
Apr. 1 Sold equipment that cost $18,000 (accumulated depreciation of $8,000 through
December 31 of the preceding year). Mora received $6,100 cash from the sale of
the equipment. Depreciation is computed on a straight-line basis. The equipment
has a five-year useful life and a residual value of $0.
Dec. 31 Recorded depreciation as follows:
Office equipment is depreciated using the double-declining-balance method over
four years with a $9,000 residual value.

Requirement: Record the transactions in the journal of Mora Company.