7-74a

1. Disposition of Fixed Assets

   In order to provide capital for new hotel construction in other locations, Wilton Hotel Corporation has decided to sell its hotel in Pierre, South Dakota. Wilton auctions the hotel and its contents on October 1, 2019, with the following results:

   Land	$599,600
   Building	300,000
   Furniture	120,000

   Wilton's accounting records reveal the following information about the assets sold:

   Asset	Acquisition Cost		Accumulated Depreciation
   Land	$14,600
   Building	350,000		$295,000
   Furniture	298,000		133,000

   Required:

   Prepare a separate journal entry to record the disposition of each of these assets. Make the journal entries for the disposition of the assets in the order that they appear in the table above. If an amount box does not require an entry, leave it blank.

   2019 Oct. 1

   • Building
   • Cash
   • Furniture
   • Gain on Disposal of Property, Plant, and Equipment
   • Land
   • Accounts Receivable
   • Accumulated Depreciation
   • Cash
   • Land
   • Loss on Disposal of Property, Plant, and Equipment
   • Accumulated Depreciation
   • Cash
   • Gain on Disposal of Property, Plant, and Equipment
   • Land
   • Loss on Disposal of Property, Plant, and Equipment

   (Record disposal of land)

   2019 Oct. 1

   • Building
   • Cash
   • Furniture
   • Gain on Disposal of Property, Plant, and Equipment
   • Land
   • Accumulated Depreciation
   • Building
   • Gain on Disposal of Property, Plant, and Equipment
   • Land
   • Loss on Disposal of Property, Plant, and Equipment
   • Accounts Receivable
   • Accumulated Depreciation
   • Cash
   • Gain on Disposal of Property, Plant, and Equipment
   • Loss on Disposal of Property, Plant, and Equipment
   • Accumulated Depreciation
   • Building
   • Cash
   • Furniture
   • Loss on Disposal of Property, Plant, and Equipment

   (Record disposal of building)

   2019 Oct. 1

   • Building
   • Cash
   • Furniture
   • Gain on Disposal of Property, Plant, and Equipment
   • Land
   • Accumulated Depreciation
   • Building
   • Furniture and Fixtures
   • Gain on Disposal of Property, Plant, and Equipment
   • Land
   • Building
   • Furniture
   • Gain on Disposal of Property, Plant, and Equipment
   • Land
   • Loss on Disposal of Property, Plant, and Equipment
   • Accumulated Depreciation
   • Cash
   • Furniture
   • Gain on Disposal of Property, Plant, and Equipment
   • Loss on Disposal of Property, Plant, and Equipment

   (Record disposal of furniture and fixtures)

   6-45

   Diveston Inc. purchased 1,000 bags of insulation, on account, from Warmco, Inc. The bags of insulation cost $4.25 each. Diveston paid Giacamini Transporation $250 to have all 1,000 bags of insulation shipped to its warehouse. Diveston returned 50 bags that were defective and paid for the remainder. Assume that Diveston uses the perpetual inventory system and that Warmco Inc. did not offer a purchase discount.

   Required:

   1. Prepare a journal entry to record the purchase of the 1,000 bags of insulation.

   	Accounts Payable Accounts Receivable Cash Cost of Goods Sold Inventory
   	Accounts Payable Accounts Receivable Cash Inventory Transportation-In
   	(Purchased inventory on account)

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   2. Prepare the entry to record the payment for shipping.

   	Accounts Payable Accounts Receivable Cash Inventory Transportation-In
   	Accounts Receivable Cash Cost of Goods Sold Inventory Transportation-In
   	(Paid shipping fees)

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   3. Prepare the entry for the return of the 50 defective bags. Round to the nearest cent.

   	Accounts Payable Accounts Receivable Cash Inventory Purchase Returns and Allowances
   	Accounts Payable Accounts Receivable Cash Inventory Purchase Returns and Allowances
   	(Returned merchandise)

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   4. Prepare the entry to record the payment for the 950 bags kept by Diveston. Round to the nearest cent.

   	Accounts Payable Accounts Receivable Cash Inventory Purchases
   	Accounts Payable Accounts Receivable Cash Cost of Goods Sold Inventory
   	(Paid for bags purchased on account)

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   5. What is the total cost of this purchase? Round to the nearest cent. $

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