Journalize a series of equipment transactions related to purchase, sale, retirement, and depreciation. Excel b. Depreciation Expense- Buildings $570,000; Equipment $4,800,000 c. Total plant assets $61,760,000 P10.5A (LO 2, 3, 5) Financial Statement At December 31, 2020, Grand Company reported the fol- lowing as plant assets. Land Buildings Less: Accumulated depreciation-buildings Equipment Less: Accumulated depreciation equipment Total plant assets $28,500,000 12,100,000 June 1 July 1 Purchased equipment for $2,500,000. Dec. 31 48,000,000 5,000,000 $ 4,000,000 16,400,000 43,000,000 $63,400,000 During 2021, the following selected cash transactions occurred. April 1Purchased land for $2,130,000. May 1 Sold equipment that cost $750,000 when purchased on January 1, 2017. The equipment was sold for $450,000. Sold land purchased on June 1, 2011 for $1,500,000. The land cost $400,000. Retired equipment that cost $500,000 when purchased on December 31, 2011. The company received no proceeds related to salvage. Instructions a. 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 dis- posed of at the time of sale or retirement. b. Record adjusting entries for depreciation for 2021. c. Prepare the plant assets section of Grand's balance sheet at December 31, 2021.
Journalize a series of equipment transactions related to purchase, sale, retirement, and depreciation. Excel b. Depreciation Expense- Buildings $570,000; Equipment $4,800,000 c. Total plant assets $61,760,000 P10.5A (LO 2, 3, 5) Financial Statement At December 31, 2020, Grand Company reported the fol- lowing as plant assets. Land Buildings Less: Accumulated depreciation-buildings Equipment Less: Accumulated depreciation equipment Total plant assets $28,500,000 12,100,000 June 1 July 1 Purchased equipment for $2,500,000. Dec. 31 48,000,000 5,000,000 $ 4,000,000 16,400,000 43,000,000 $63,400,000 During 2021, the following selected cash transactions occurred. April 1Purchased land for $2,130,000. May 1 Sold equipment that cost $750,000 when purchased on January 1, 2017. The equipment was sold for $450,000. Sold land purchased on June 1, 2011 for $1,500,000. The land cost $400,000. Retired equipment that cost $500,000 when purchased on December 31, 2011. The company received no proceeds related to salvage. Instructions a. 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 dis- posed of at the time of sale or retirement. b. Record adjusting entries for depreciation for 2021. c. Prepare the plant assets section of Grand's balance sheet at December 31, 2021.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
P10.5
Transcribed Image Text:**Title: Understanding Plant Asset Transactions: A Case Study of Grand Company**
**Introduction**
In this exercise, we explore plant asset accounting by examining transactions and financial reporting of Grand Company as of December 31, 2020. The information focuses on the purchase, sale, retirement, and depreciation of plant assets.
**Initial Financial Statement Overview (as of December 31, 2020):**
- **Assets:**
- Land: $4,000,000
- Buildings: $28,500,000
- Less: Accumulated Depreciation—Buildings: $12,100,000
- Equipment: $48,000,000
- Less: Accumulated Depreciation—Equipment: $5,000,000
- **Total Plant Assets:** $63,400,000
**Transactions During 2021:**
1. **April 1**: Purchased land for $2,130,000.
2. **May 1**: Sold equipment with an original purchase cost of $750,000 (acquired on January 1, 2017) for $450,000.
3. **June 1**: Sold land purchased on June 1, 2011, for $1,500,000. The original cost was $400,000.
4. **July 1**: Purchased equipment for $2,500,000.
5. **December 31**: Retired equipment valued at $500,000 (acquired on December 31, 2011) with no salvage proceeds.
**Instructions for Accounting Tasks:**
a. **Journalize Transactions:**
- Utilize straight-line depreciation for buildings and equipment. Buildings have a 50-year lifespan with no salvage value. Equipment has a 10-year lifespan also with no salvage value. Update depreciation for assets sold or retired during 2021.
b. **Record Adjusting Entries:**
- Calculate and record depreciation expenses for the year 2021.
c. **Prepare the Plant Assets Section:**
- Update Grand Company’s balance sheet for December 31, 2021, reflecting these transactions.
**Calculated Outcomes:**
- **Depreciation Expense:**
- Buildings: $570,000
- Equipment: $4,800,000
- **Total Plant Assets on December 31, 2021:** $61,760,000
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