Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

  1. 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:

  1. Original Purchase, as they were not recorded until now all were paid with cash at the time of purchase
  2. Any dispositions in the year
  3. Amortization, using the appropriate method for new and previously purchased assets
    1. An explanation as to why you selected that method

Assets purchased:

  1. 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.

  1. 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:

  1. 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:

  1. Please record amortization for each of the newly purchased assets as appropriate, separately, and explain each:

  1. 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.

  1. 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

Journal Entry Template: note please record each transaction separately

Entry #

Date

Description

Account Number

Account Name

Debit or Credit

Amount

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Data Analytics For Auditing Using ACL

Authors: Alvin A. Arens

4th Edition

0912503629, 978-0912503622

More Books

Students also viewed these Accounting questions