Recording Acquisition Scenarios Review of the property, plant, and equipment accounts of James Company reveals the following transactions. 1. On January 1, 2020, new equipment is purchased with a list price of $30,000. The company did not take advantage of a 1% cash discount available upon full payment of the invoice within 10 days. Shipping costs paid by the seller were $100. Installation costs are $400, representing 10% of the monthly salary of the manager (installation took two days). A wall is moved two feet at a cost of $800 to make room for the equipment. Cash discounts not taken are considered interest expense. 2. During January 2020, the first month of operations, the newly purchased equipment became inoperative due to a product defect. The seller repaired the equipment at no cost; however, the specially trained operator was idle during the two weeks the machine was inoperative. The operator was paid regular wages ($650) during the period, although the only work performed was to observe the repair by the factory representative. 3. On January 1, 2020, the company bought fixtures with a list price of $4,500; the company paid $1,500 cash and issued a one-year, noninterest-bearing note payable for the balance. The current interest rate for this type of note was 15%. 4. On January 1, 2020, the company purchased an automatic counter to be attached to a machine in use, cost $700. The estimated useful life of the counter was 7 years, and the estimated life of the machine was 10 years. 5. On July 1, 2020, a contractor completed construction of a building for the company. The company paid the contractor with a $400,000 face value, 20-year, 8% bonds payable, at which time financial consultants advised that the bonds would sell at 96 ($384,000). 6. On December 31, the company received a property donation from the city for future expansion of its manufacturing facilities. The fair value of this property is estimated at $40,000, although the cost of the property on the citys records is $10,000.

Pretax Sales Accounts Payable $30,000 Income Ending Inventory $72,000 OX Accounts Receivable $60,000 Ox Prelim bal. $51,000 0 $400,000 23,000 x Ox 0 x b 0 x 0 x 0 0 x 0 O 0 0 0 d 0 0 0 0 0 e OX 0 0 0 0 x f 0 x 0 0 0 x g 0 x 0 0 0 0 x h 0 X 0 0 0 x i 0 x 0 0 x 0 0 Corrected Bal. $ Ox $ 0 x $ 0 x $ 0 X $ 0 x Journal Entries Adjusting Entries b. Record depreciation at the end of 2020 for (1) equipment, (2) fixtures, and (3) building. None of these assets are expected to have a residual value except fixtures (residual value is $500). Estimated useful lives are: fixtures, 5 years; equipment, 10 years; and building, 40 years. Provide a separate entry for each asset. 5 Note: Round amounts to the nearest whole dollar. Date Account Name (1) Dec. 31, 2020 Dr. Cr. . 0 o o 0 0 To record depreciation for equipment (2) Dec. 31, 2020 0 0 0 o To record depreciation for fixtures (3) Dec. 31, 2020 O O o o 0 To record depreciation for building Pretax Sales Accounts Payable $30,000 Income Ending Inventory $72,000 OX Accounts Receivable $60,000 Ox Prelim bal. $51,000 0 $400,000 23,000 x Ox 0 x b 0 x 0 x 0 0 x 0 O 0 0 0 d 0 0 0 0 0 e OX 0 0 0 0 x f 0 x 0 0 0 x g 0 x 0 0 0 0 x h 0 X 0 0 0 x i 0 x 0 0 x 0 0 Corrected Bal. $ Ox $ 0 x $ 0 x $ 0 X $ 0 x Journal Entries Adjusting Entries b. Record depreciation at the end of 2020 for (1) equipment, (2) fixtures, and (3) building. None of these assets are expected to have a residual value except fixtures (residual value is $500). Estimated useful lives are: fixtures, 5 years; equipment, 10 years; and building, 40 years. Provide a separate entry for each asset. 5 Note: Round amounts to the nearest whole dollar. Date Account Name (1) Dec. 31, 2020 Dr. Cr. . 0 o o 0 0 To record depreciation for equipment (2) Dec. 31, 2020 0 0 0 o To record depreciation for fixtures (3) Dec. 31, 2020 O O o o 0 To record depreciation for building