1) Prepare entries for the year 2020 related to the above transactions.2) How much is the gain or loss on sale and trade-in of property, plant and equipment?3)Prepare the section of the Property, Plant and Equipment for May-Jo Machine Shop Co. to be shown in the Statement of Financial Position as of December 31, 2020. The property, plant and equipment section of the Statement of Financial Positionat December 31, 2019 of May-Jo Machine Shop Co. appears as follows:LandP 800,000BuildingLess: Accumulated depreciationEquipmentLess: Accumulated depreciationNet property, plant and equipmentBecause of good business conditions the company decided to move to a moreP1,500,000450,000P 700,0001,050,000400,000300,000P2,150,000strategic location.Transactions on the transfer of location for the year 2020are described below:1. The land and building on the old site were sold for P1,700,000 on January 2,2020.2. Equipment with a depreciated value of P150,000 (original cost, P400,000) wassold for P120,000 on April 1, 2020.3. New equipment with an invoice price of P300,000 was purchased on May 1, 2020.A 2% discount was allowed.to the hauler and P1,500 was spent for installation.4. The land where the company moved in as new site was given by a friend of theDelivery of the equipment to the site was P1,000 paidIt had an appraised value ofcompany President as gift on February 1, 2020.P5,000,000. However, the company paid P250,000 to the B.I.R. for taxes and othercosts directly related to the land.5. An old building on the land had to be demolished and the company paid P400, 000on this on February 15, 2020.6. A new equipment with an invoice cost of P150,000 was purchased on October 31,2020.The company paid P100, 000 cash and was granted a trade-in allowance ofP50,000depreciation of P15,000.7. May-Jo company constructed a new building at its new site for P2,800,000 ononused equipment which hadcostof P40,000 andaccumulatedaaMay 31,2020.8. Extraordinary repairs on the old equipment amounting to P50,000 were madeafter the equipment have been moved to the new site on June 15, 2020.9. Buildings are depreciated using straight-line with 30 year life while equipmenthave 10 year life with no salvage values.

NOTE : As per BARTLEBY guidelines, when multiple questions are given then first question is to be…

Answered: The property, plant and equipment…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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1) Prepare entries for the year 2020 related to the above transactions.

2) How much is the gain or loss on sale and trade-in of property, plant and equipment?

3)Prepare the section of the Property, Plant and Equipment for May-Jo Machine Shop Co. to be shown in the Statement of Financial Position as of December 31, 2020.

The property, plant and equipment section of the Statement of Financial Position
at December 31, 2019 of May-Jo Machine Shop Co. appears as follows:
Land
P 800,000
Building
Less: Accumulated depreciation
Equipment
Less: Accumulated depreciation
Net property, plant and equipment
Because of good business conditions the company decided to move to a more
P1,500,000
450,000
P 700,000
1,050,000
400,000
300,000
P2,150,000
strategic location.
Transactions on the transfer of location for the year 2020
are described below:
1. The land and building on the old site were sold for P1,700,000 on January 2,
2020.
2. Equipment with a depreciated value of P150,000 (original cost, P400,000) was
sold for P120,000 on April 1, 2020.
3. New equipment with an invoice price of P300,000 was purchased on May 1, 2020.
A 2% discount was allowed.
to the hauler and P1,500 was spent for installation.
4. The land where the company moved in as new site was given by a friend of the
Delivery of the equipment to the site was P1,000 paid
It had an appraised value of
company President as gift on February 1, 2020.
P5,000,000. However, the company paid P250,000 to the B.I.R. for taxes and other
costs directly related to the land.
5. An old building on the land had to be demolished and the company paid P400, 000
on this on February 15, 2020.
6. A new equipment with an invoice cost of P150,000 was purchased on October 31,
2020.
The company paid P100, 000 cash and was granted a trade-in allowance of
P50,000
depreciation of P15,000.
7. May-Jo company constructed a new building at its new site for P2,800,000 on
on
used equipment which had
cost
of P40,000 and
accumulated
a
a
May 31,2020.
8. Extraordinary repairs on the old equipment amounting to P50,000 were made
after the equipment have been moved to the new site on June 15, 2020.
9. Buildings are depreciated using straight-line with 30 year life while equipment
have 10 year life with no salvage values.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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