Problem 2 : P10-32A

Background:

Grace Carol Associates surveys American eating habits. The companys accounts include Land, Buildings, Office Equipment, and Communication Equipment, with a separate Accumulated Depreciation account for each asset. During 2016, Grace Carol completed the following transactions.

Assignment:

This question has 3 requirements. Scroll down to review the requirements and ensure you complete all requirements before submitting your work for grading.

Requirements

1. The accounts used by Grace Carol Associates are provided in the Chart of Accounts (click on Chart of Accounts to view). The accounts have already been opened in the General Ledger (click on General Ledger to view).
2. Prepare journal entries to record the transactions occurred during year and post the entries to the General Ledger.
3. Review each of the accounts in the General Ledger to see the results of posting the journal entries, including the changes in each account as well as the balance in each.

Transactions:

01/01/2016

Purchased office equipment, $112,000. Paid $74,000 cash and financed the remaining with a note payable.

04/01/2016

Acquired land and communication equipment in a lump-sum purchase. Total cost was $340,000 paid in cash. An independent appraisal valued the land at $267,750 and the communication equipment at $89,250.

09/01/2016

Sold a building that cost $540,000 (accumulated depreciation of $240,000 through December 31 of the preceding year). Grace Carol received $380,000 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 $60,000.

12/31/2016

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 $2,000 residual value.