P10-32A Recording lump sum asset purchases, depreciation, and disposals.

Greta Chung Associates surveys American eating habits. The company's accounts include Land, Buildings, Office Equipment, and Communications Equipment, with a separate Accumulated Depreciation account for each asset. During 2014, Greta Chung completed the following transactions:

a separate Accumulated Depreciation account for each asset. During 2014, Gretta Chung completed the following transactions:

Jan. 1 Purchased office equipment, $119,000. Paid $80,000 cash and financed the

remaining with a note payable.

Apr. 1 Acquired land and communication equipment in a lump-sum purchase. Total

cost was $270,000 paid in cash. An independent appraisal valued the land at

$212,625 and the communication equipment at $70,875.

Sep. 1 Sold a building that cost $555,000 (accumulated depreciation of $255,000

through December 31 of the preceding year). Chung received $370,000 cash

from the sale of the building. Depreciation is computed on a straight-line basis.

The building has a 40-year useful life and a residual value of $75,000.

Dec. 31 Recorded depreciation as follows:

Communication equipment is depreciated by the straight-line method over a

five-year life with zero residual value.

Office equipment is depreciated using the double-declining-balance method over five years with a $2000 residual value.

Record the transactions in the journal of Gretta Chung Associates.

Calculations: Apr. 1 - Acquisition of land and communication equipment: Asset Market Value Land Comm. Equip. Total Sep. 1 - Sale of building Straight-line depreciation = = = Market value of assets received Less: Book value of asset disposed of Cost Less: Accumulated Depreciation Gain or (Loss) Dec. 31 - Depreciation on communication equipment Straight-line depreciation = = = Dec. 31 - Depreciation on office equipment Double-declining-balance depreciation = = = Total Purchase Price Percentage of Total Value = Assigned Cost of Each Asset 100% (Cost Residual value) / Useful life (Number of Months / 12) (Cost Residual value) / Useful life (Number of Months / 12) (Cost - Accumulated depreciation) 2 (1 / Useful life) Date Jan. 1 Accounts and Explanation Office Cash Note Payable To record purchase of office equipment Apr. 1 Land Communication equipment Cash To record purchase of land and comm equipment. Sep. 1 Depreciation Expense--Building Accumulated Depreciation--Buiding To Record depreciation on building. Cash Accumulated Depreciation--Building Building Gain on Disposal To record sale of building. Dec. 31 Depreciation Expense--Communication Equipment Accumulated Depreciation--Comm. Equipment To record depreciation on communication equipment Dec. 31 Depreciation Expense--Office Equipment Accumulated Depreciation--Office Equipment To record depreciation on office equipment Debit Credit Accounts to use for journal entries Office Equipment Cash Note Payable Land Communication Equipment Cash Depreciation ExpenseBuilding Accumulated DepreciationBuilding Cash Accumulated DepreciationBuilding Building Gain on Disposal Depreciation ExpenseCommunication Equipment Accumulated DepreciationComm. Equipment Depreciation ExpenseOffice Equipment Accumulated DepreciationOffice Equipment