Question 3 (30%)

Tim has the following PPE accounts: Land, Buildings, and Equipment, with a separate accumulated depreciation account for each of these except land. Tim completed the following transactions:

Jan 2 Tim acquired the equipment of $136,000 few years ago. Now traded in equipment with accumulated depreciation of $65,000 for similar new equipment with a cash cost of $175,000. Received a trade-in allowance of $75,000 on the old equipment and paid $100,000 in cash.

Jun 30 Sold a building that had a cost of $655,000 and had accumulated depreciation of $130,000 through December 31 of the preceding year. Depreciation is computed on a straight-line basis. The building has a 40-year useful life and a residual value of $275,000. Tim received $115,000 cash and a $405,250 note receivable.

Oct 31 Purchased land and a building for a single price of $390,000. An independent appraisal valued the land at $221,100 and the building at $180,900. Dec 31 Recorded depreciation as follows:

Equipment has an expected useful life of 5 years and an estimated residual value of 6% of cost. Depreciation is computed on the double-declining-balance method.

Depreciation on buildings is computed by the straight-line method. The new building carries a 40-year useful life and a residual value equal to 20% of its cost.

Requirement: Record the transactions in Tims journal.