You are engaged in the audit of the financial statements of Holman Corporation for the year ended December 31, 20X6. The accompanying analyses of the Property, Plant, and Equipment and related accumulated depreciation accounts have been prepared by the chief accountant of the client. You have traced the beginning balances to your prior years audit working papers.

HOLMAN CORPORATION
Analysis of Property, Plant, and Equipment
and Related Accumulated Depreciation Accounts
Year Ended December 31, 20X6
	Final				Assets								Per Ledger
Description	12/31/X5				Additions				Retirements				12/31/X6
Land	$	422,500			$	5,000							$	427,500
Buildings		120,000				17,500								137,500
Machinery and equipment		385,000				40,400			$	26,000				399,400
	$	927,500			$	62,900			$	26,000			$	964,400

	Final				Accumulated Depreciation								Per Ledger
Description	12/31/X5				Additions*				Retirements				12/31/X6
Buildings	$	60,000			$	5,150							$	65,150
Machinery and equipment		173,250				39,220								212,470
	$	223,250			$	44,370							$	277,620

*Depreciation expense for the year.

All plant assets are depreciated on the straight-line basis (no residual value taken into consideration) based on the following estimated service lives: building, 25 years; all other items, 10 years. The companys policy is to take one half-years depreciation on all asset additions and disposals during the year.

Your audit revealed the following information:

1. The company completed the construction of a wing on the plant building on June 30. The service life of the building was not extended by this addition. The lowest construction bid received was $17,500, the amount recorded in the Buildings account. Company personnel constructed the addition at a cost of $16,000 (materials, $7,500; labor, $5,500; and overhead, $3,000).
2. On August 18, $5,000 was paid for paving and fencing a portion of land owned by the company and used as a parking lot for employees. The expenditure was charged to the Land account.
3. The amount shown in the machinery and equipment asset retirement column represents cash received on September 5 upon disposal of a machine purchased in July 20X2 for $48,000. The chief accountant recorded depreciation expense of $3,500 on this machine in 20X6.
4. Harbor City donated land and a building appraised at $100,000 and $400,000, respectively, to Holman Corporation for a plant. On September 1, the company began operating the plant. Since no costs were involved, the chief accountant made no entry for the above transaction.