Bailand Company purchased a building for $148,000 that had an estimated residual value of $8,000 and an estimated service life of 10 years Bailand purchased the building 4 years ago and has used straight line depreciation At the beginning of the fifth year (before it records depreciation expense for the year), the following independent situations occur 1 Bailand estimates that the asset has 8 years life remaining (for a total of 12 years) 2 Bailand changes to the sum of the years digits method 3 Bailand discovers that the estimated residual value has been ignored in the computation of depreciation expense Required For each of the independent situations, prepare all the journal entries relating to the building for the fifth year Ignore income taxes CHART OF ACCOUNTS Bailand Company General Ledger ASSETS 111 Cash 121 Accounts Receivable 141 Inventory 181 Building 198 Accumulated Depreciation LIABILITIES 211 Accounts Payable 231 Salaries Payable 250 Unearned Revenue 261 Income Taxes Payable EQUITY 311 Common Stock 331 Retained Earnings REVENUE 411 Sales Revenue EXPENSES 500 Cost of Goods Sold 511 Insurance Expense 512 Utilities Expense 521 Salaries Expense 531 Depreciation Expense 532 Bad Debt Expense 559 Miscellaneous Expenses Bailand estimates that the asset has 8 years life remaining (for a total of 12 years) Prepare the journal entry on December 31 to record depreciation in the fifth year after the change in estimate Ignore income taxes Additional Instruction PAGE 16 GENERAL JOURNAL DATE ACCOUNT TITLE POST REF DEBIT CREDIT 1 2 Prepare the journal entry on December 31 to record depreciation in the fifth year after the change in depreciation method Additional Instruction PAGE 16 GENERAL JOURNAL DATE ACCOUNT TITLE POST REF DEBIT CREDIT 1 2 Prepare the journal entries on December 31 to record the prior period adjustment for the error and depreciation in the fifth year Ignore income taxes Additional Instruction PAGE 16 GENERAL JOURNAL DATE ACCOUNT TITLE POST REF DEBIT CREDIT 1 2 3 4

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Bailand Company purchased a building for $148,000 that had an estimated residual value of $8,000 and an estimated service life of 10 years. Bailand purchased

Bailand Company purchased a building for $148,000 that had an estimated residual value of $8,000 and an estimated service life of 10 years. Bailand purchased the building 4 years ago and has used straight-line depreciation. At the beginning of the fifth year (before it records depreciation expense for the year), the following independent situations occur:

1.	Bailand estimates that the asset has 8 years life remaining (for a total of 12 years).
2.	Bailand changes to the sum-of-the-years-digits method.
3.	Bailand discovers that the estimated residual value has been ignored in the computation of depreciation expense.

	Required:
	For each of the independent situations, prepare all the journal entries relating to the building for the fifth year. Ignore income taxes.

CHART OF ACCOUNTS

Bailand Company

General Ledger

	ASSETS
111	Cash
121	Accounts Receivable
141	Inventory
181	Building
198	Accumulated Depreciation

	LIABILITIES
211	Accounts Payable
231	Salaries Payable
250	Unearned Revenue
261	Income Taxes Payable

	EQUITY
311	Common Stock
331	Retained Earnings

	REVENUE
411	Sales Revenue

	EXPENSES
500	Cost of Goods Sold
511	Insurance Expense
512	Utilities Expense
521	Salaries Expense
531	Depreciation Expense
532	Bad Debt Expense
559	Miscellaneous Expenses

Bailand estimates that the asset has 8 years life remaining (for a total of 12 years). Prepare the journal entry on December 31 to record depreciation in the fifth year after the change in estimate. Ignore income taxes. Additional Instruction

PAGE 16

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2

Prepare the journal entry on December 31 to record depreciation in the fifth year after the change in depreciation method. Additional Instruction

PAGE 16

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2

Prepare the journal entries on December 31 to record the prior period adjustment for the error and depreciation in the fifth year. Ignore income taxes. Additional Instruction

PAGE 16

GENERAL JOURNAL