At December 31, 2019, Grand Company reported the following as plant assets.
During 2020, the following selecterd cash transactions occurred.
| April 1 | Purchased land for $2,130,000. |
| May 1 | Sold equipment that cost $750,000 when purchased on January 1, 2016. The equipment was sold for $450,000. |
| June 1 | Sold land purchased on June 1, 2010 for $1,500,000. The land cost $400,000. |
| July 1 | Purchased equipment for $2,500,000. |
| Dec. 1 | Retired equipment that cost $500,000 when purchased on December 31, 2010. The company received no proceeds related to salvage. |
Instructions
- Journalize the above transactions. The company uses straight-line depreciation for buildings and equipment. the buildings are estimated to have a 50-year life and no salvage value. The equipment is estimated to have a 10-year useful life and no salvage value. Update depreciation on assets disposed of at the time of sale or retirement.
- Record adjusting entries for depreciation for 2020.
- Prepare the plant assets section of Grand's balance sheet at December 31, 2020.
Solution
a.
Grand Company
Journal entries
Journal entries
b.
Grand Company
Adjusting entries
Adjusting entries
c.
Grand Company
Balance Sheet (Partial)
December 31, 2020
Balance Sheet (Partial)
December 31, 2020
