Chapter 8, Problem 47AP

Journalizing long-term asset transactions (Learning Objectives 2, 3, & 5) 20-25 min.

Regal Freightway provides freight service. The company’s balance sheet includes Land, Buildings, and Motor-Carrier Equipment. Regal Freightway uses a separate accumulated depreciation account for each depreciable asset. During 2018, Regal Freightway completed the following transactions:

Jan 1	Traded in motor-carrier equipment with accumulated depreciation of $88,000 (cost of $140,000) for new equipment with a cash cost of $128,000. Regal Freightway received a trade-in allowance ol $63,000 on the old equipment and paid the remainder in cash.
Jul 1	Sold a building that cost $570,000 and had accumulated depreciation of $270,000 through December 31 of the preceding year. Depreciation is computed on a straight-line basis. The building has a 40-year useful life and a residual value of $50,000. Regal Freightway received $110,000 cash and a $280,000 note receivable.
Oct 31	Purchased land and a building for a cash payment of $650,000. An independent appraisal valued the land at $235,950 and the building at $479,050.
Dec 31	Recorded depreciation as follows: New motor-carrier equipment has an expected useful life of 500,000 miles and an estimated residual value of $18,000. Depreciation method is the units-of-production method. During the year, Regal Freightway drove the equipment 200,000 miles. Depreciation on buildings is straight-line. The new building has a 40-year useful life and a residual value equal to $64,700.

Requirement

1. Record the transactions in Regal Freightway’s journal.