Problem $1$

At December $31,2025,$ Arnold Corporation reported the following plant assets:

During $2026,$ the following selected cash transactions occurred.

April $1$ Purchased land for $$2,200,000.$

May $1$ Sold equipment that cost $$600,000$ when purchased on January $1,2019.$ The

equipment was sold for $$170,000$

June $1$ Sold land for $$1,600,000.$ The land cost $$1,000,000.$

July $1$ Purchased equipment for $$1,100,000.$

Dec. $31$ Retired equipment that cost $$700,000$ when purchased on December $31,2016.$ No

salvage value received.

Instructions

a$.$ Journalize the transactions. $($Hint: Set up t$-$accounts, post beginning balances, then post $2026$

transactions.$)$ Arnold uses straight$-$line deprecation for buildings and equipment. The buildings

are estimated to have a $40-$year useful life and no salvage value; the equipment is estimated to

have $10-$year useful life and no salvage value. Update depreciation on assets disposed of at the

time of retirement.

b$.$ Record adjusting entries for depreciation for $2026.$

c$.$ Prepare the plant assets section of Arnold's balance sheet at December $31,2026.$