Taylors Treats needs your help in accounting for the following long-term asset transactions.

May 5, 2021 Taylors Treats purchased Mattys Muffins, one of Taylor's competitors for $10 million cash. The market values of Mattys assets and liabilities are $15.5 million and $7.5 million, respectively.

June 30, 2021 Taylors Treats purchased land, a building and some equipment for a total cost of $900,000. At the time of acquisition, the land has a current fair value of $450,000, the buildings fair value is $400,000 and the equipments fair value is $150,000. Taylor paid $500,000 cash, and signed a note payable for the remainder.

December 31, 2021 Depreciation is recorded as follows:

Equipment is depreciated by the double diminishing-balance method over a 5 year life with a $30,000 residual value. The building has a 40 year useful life and residual value of $50,000. Depreciation is calculated on a straight-line basis for the building.

December 31, 2022 Depreciation is recorded.

January 1, 2025 Sold all of the equipment for $32,500.

Required:

1) Record the May and June 2021 transactions in Taylors journal with appropriate descriptions for each entry.

2) Prepare a depreciation schedule for the equipment using the double diminishing balance method for 2021 December 2024.

3) Record the adjusting journal entries required for depreciation for Taylor for 2021 and 2022, with appropriate descriptions for each entry.

4) Record the January 1, 2025 transaction in Taylors journal with appropriate descriptions for each entry.