Question
Hello, I am struggling with this depreciation homework assignment. I have about 90% of the answers correct. But, I am struggling with the 2 of
Hello, I am struggling with this depreciation homework assignment. I have about 90% of the answers correct. But, I am struggling with the 2 of the Dec 31st adjusting entries. I have noted them with the word "WRONG". Help! :-)
Q1) At January 1, 2017, Oriole Company reported the following property, plant, and equipment accounts:
Accumulated depreciationbuildings $62,700,000
Accumulated depreciationequipment 54,100,000
Buildings 97,400,000
Equipment 150,900,000
Land 23,000,000
The company uses straight-line depreciation for buildings and equipment, its year-end is December 31, and it makes adjusting entries annually. The buildings are estimated to have a 40-year useful life and no salvage value; the equipment is estimated to have a 10-year useful life and no salvage value.
During 2017, the following selected transactions occurred:
Apr. 1 Purchased land for $4.50 million. Paid $1.125 million cash and issued a 3-year, 6% note payable for the balance. Interest on the note is payable annually each April 1.
May 1 Sold equipment for $330,000 cash. The equipment cost $3.18 million when originally purchased on January 1, 2009.
June 1 Sold land for $3.72 million. Received $900,000 cash and accepted a 3-year, 5% note for the balance. The land cost $1.50 million when purchased on June 1, 2011. Interest on the note is due annually each June 1.
July 1 Purchased equipment for $2.10 million cash.
Dec. 31 Retired equipment that cost $1 million when purchased on December 31, 2007. No proceeds were received.
| Date | Account Titles | Debit | Credit |
| $ | $ | ||
| 1-Apr-17 | Land | $4,500,000 | |
| Cash | $1,125,000 | ||
| Long-term Note Payable | $3,375,000 | ||
| 1-May-17 | Depreciation Expense | $106,000 | |
| Accumulated Depreciation - Equipment | $106,000 | ||
| 1-May-17 | Accumulated Depreciation | $2,650,000 | |
| Cash | $330,000 | ||
| Loss on sale of equipment | $200,000 | ||
| Equipment | $3,180,000 | ||
| 1-Jun | Cash | $900,000 | |
| Long-term Note Receivable | $2,820,000 | ||
| Land | $1,500,000 | ||
| Gain on sale of land | $2,220,000 | ||
| 1-Jul-17 | Equipment | $2,100,000 | |
| Cash | $2,100,000 | ||
| 31-Dec-17 | Depreciation Expense | $17,312,000 | |
| Accumulated Depreciation - Equipment | $14,877,000 | ||
| Accumulated Depreciation - Buildings | $2,435,000 | ||
| 31-Dec-17 | Accumulated Depreciation - Equipment | $1,000,000 | |
| Equipment | $1,000,000 | ||
| 31-Dec | Depreciation Expense | $100,000 | |
| Accumulated Depreciation - Equipment | $100,000 | ||
| (To record depreciation expense for buildings) | |||
| 31-Dec | Depreciation expense | $2,435,000 | |
| Accumulated Depreciation - Buildings | $2,435,000 | ||
| (To record depreciation expense for equipment) | |||
| 31-Dec | Depreciation expense (Note 1 I below) | $15,173,000 | WRONG! |
| Accumulated Depreciation - Equipments | $15,173,000 | WRONG! | |
| (To record interest accrued but not yet paid) | |||
| 31-Dec | Interest expense | $151,875 | |
| Interest payable | $151,875 | ||
| (To record interest accrued but not yet received) | |||
| 31-Dec | Interest receivable | $70,500 | WRONG! |
| Interest revenue | $70,500 | WRONG! | |
| Note 1 | |||
| Cost | Depreciation @ 10% | Period | Period Depreciation |
| $150,900,000 | $15,090,000 | 4 | $5,030,000 |
| $150,570,000 | $15,057,000 | 2 | $2,509,500 |
| $152,670,000 | $15,267,000 | 6 | $7,633,500 |
| $15,173,000.00 |
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