Question
Record PPE Transactions Background: Plants from Paradise reports under ASPE, and has a December 31, 2021, year end. All work that you are preparing is
- Record PPE Transactions
Background:
Plants from Paradise reports under ASPE, and has a December 31, 2021, year end. All work that you are preparing is for their financial statements dated as such.
Miranda provided you following details about equipment that was purchased during the year, and asked that you record the following transactions:
- Original Purchase, as they were not recorded until now all were paid with cash at the time of purchase
- Any dispositions in the year
- Amortization, using the appropriate method for new and previously purchased assets
- An explanation as to why you selected that method
Assets purchased:
- New greenhouse for $20,000, purchased on June 1, 2021. The greenhouse is expected to last 15 years and will have a salvage value of $2,500 and should be recorded to building.
- A new tractor was purchased for $12,500 on November 1, 2021. The tractor is expected to last 5 years. It will be used as scrap metal after its useful life, with no salvage value. The tractor is expected to last 10,000 operating hours.
Assets sold:
- On January 1, 2021, Plants sold their old tractor for cash as it was going to be replaced by the new one in the winter. This tractor had the following relevant balances:
Original Purchase: $22,000
Accumulated Amort: $12,000
Sale Price: $10,000
Previously purchased assets, amortization:
- Please record amortization for each of the newly purchased assets as appropriate, separately, and explain each:
- For the other equipment that was previously purchased, it has an original purchase price of $55,000 and it is depreciated using straight-line, for a yearly expense of $5,000. Note: make no adjustment for the disposed equipment, or newly purchased assets here.
- For the other buildings, they have a combined total purchase price of $125,000, and is amortized using straight-line at a rate of $10,000 a year.
Note: make no adjustment for the disposed equipment, or newly purchased assets here
Relevant Accounts:
1000 | Cash | 2010 | Wages Payable |
1010 | Accounts Receivable | 3000 | Miranda Cornell, Equity |
1015 | Allowance for Doubtful Accounts | 4000 | Sales Revenue Plants |
1020 | Interest Receivable | 4010 | Sales Revenue Soil |
1030 | Inventory - Plants | 4020 | Sales Revenue Delivery |
1040 | Inventory - Soil | 5000 | Cost of Goods Sold |
1050 | PPE Equipment | 5010 | Sales Discounts Expense |
1055 | Acc. Amortization Equipment | 5040 | Bad Debt Expense |
1060 | PPE Building | 5050 | Salaries Expense |
1065 | Acc. Amortization - Building | 5060 | Amortization Expense |
2000 | Accounts Payable |
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Journal Entry Template: note please record each transaction separately
Entry # | Date | Description | Account Number | Account Name | Debit or Credit | Amount |
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