Recording Entries Using Group Depreciation Method

Ohio Company owns 10 warehouses of similar type except for varying size. The group system of depreciation is applied to the 10 warehouses, and the rate is 6% each year on cost. At the end of 2020, the asset account, Warehouses, showed a balance of $11,660,000 (residual value $660,000), and the Accumulated Depreciation account showed a balance of $5,280,000. At the start of 2021, Warehouse #8, costing $880,000, was torn down. Materials salvaged from the demolition were sold for $116,600, and $33,000 was spent on demolition.

Required

Provide entries to record (a) depreciation for 2020, (b) disposal of the warehouse in 2021, and (c) depreciation for 2021.

a. Depreciation for 2020

Date	Account Name	Dr.	Cr.
Dec. 31, 2020	AnswerCashInventoryPropertyBuildingEquipmentAccumulated DepreciationCost of Oil ReserveRetained EarningsPrior Period AdjustmentSalesCost of Goods SoldDepreciation ExpenseExploration ExpenseRepairs ExpenseGain on Reversal of Impairment LossLoss on ImpairmentLoss on DisposalN/A	Answer	Answer
	AnswerCashInventoryPropertyBuildingOther EquipmentAccumulated DepreciationCost of Oil ReserveRetained EarningsPrior Period AdjustmentSalesCost of Goods SoldDepreciation ExpenseExploration ExpenseRepairs ExpenseGain on Reversal of Impairment LossLoss on ImpairmentLoss on DisposalN/A	Answer	Answer

b. Disposal of the warehouse in 2021

Date	Account Name	Dr.	Cr.
Jan. 01, 2021	Cash	Answer	Answer
	AnswerCashInventoryPropertyBuildingEquipmentAccumulated DepreciationCost of Oil ReserveRetained EarningsPrior Period AdjustmentSalesCost of Goods SoldDepreciation ExpenseExploration ExpenseRepairs ExpenseGain on Reversal of Impairment LossLoss on ImpairmentLoss on DisposalN/A	Answer	Answer
	AnswerCashInventoryPropertyBuildingOther EquipmentAccumulated DepreciationCost of Oil ReserveRetained EarningsPrior Period AdjustmentSalesCost of Goods SoldDepreciation ExpenseExploration ExpenseRepairs ExpenseGain on Reversal of Impairment LossLoss on ImpairmentLoss on DisposalN/A	Answer	Answer

c. Depreciation for 2021

Date	Account Name	Dr.	Cr.
Dec. 31, 2021	AnswerCashInventoryPropertyBuildingEquipmentAccumulated DepreciationCost of Oil ReserveRetained EarningsPrior Period AdjustmentSalesCost of Goods SoldDepreciation ExpenseExploration ExpenseRepairs ExpenseGain on Reversal of Impairment LossLoss on ImpairmentLoss on DisposalN/A	Answer	Answer
	AnswerCashInventoryPropertyBuildingOther EquipmentAccumulated DepreciationCost of Oil ReserveRetained EarningsPrior Period AdjustmentSalesCost of Goods SoldDepreciation ExpenseExploration ExpenseRepairs ExpenseGain on Reversal of Impairment LossLoss on ImpairmentLoss on DisposalN/A	Answer	Answer