P10-5A

Journalize a series of equipment transactions related to purchase, sale, retirement, and depreciation.

(LO 2, 3, 5)

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

Land		$4,000,000
Buildings	$28,500,000
Less: Accumulated depreciationbuildings	12,100,000	16,400,000
Equipment	48,000,000
Less: Accumulated depreciationequipment	5,000,000	43,000,000
Total plant assets		$63,400,000

During 2018, the following selected cash transactions occurred.

April1	Purchased land for $2,130,000.
May1	Sold equipment that cost $750,000 when purchased on January 1, 2014. The equipment was sold for $450,000.
June1	Sold land purchased on June 1, 2008 for $1,500,000. The land cost $400,000.
July1	Purchased equipment for $2,500,000.
Dec. 31	Retired equipment that cost $500,000 when purchased on December 31, 2008. The company received no proceeds related to salvage.

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.

Depreciation ExpenseBuildings $570,000; Equipment $4,800,000

(c)

Prepare the plant assets section of Grand's balance sheet at December 31, 2018.

Total plant assets $61,760,000