Question

Granny Carney Associates surveys American eating habits. The company's accounts include Land, Buildings, Office Equipment, and Communication Equipment, with a separate Accumulated Depreciation account for each depreciable asset. During 2018, Granny Carney Associates completed the following transactions: (Click the icon to view the transactions.) Record the transactions in the journal of Granny Carney Associates. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Jan. 1: Purchased office equipment, $119,000. Paid $84,000 cash and financed the remainder with a note payable. (Record a single compound journal entry.) Date Accounts and Explanation Debit Credit Jan. 1
Jan. 1 Purchased office equipment, $119,000. Paid $84,000 cash and financed the remainder with a note payable. Apr. 1 Acquired land and communication equipment in a lump-sum purchase. Total cost was $320,000 paid in cash. An independent appraisal valued the land at $252,000 and the communication equipment at $84,000. Sep. 1 Sold a building that cost $570,000 (accumulated depreciation of $265,000 through December 31 of the preceding year). Granny Carney Associates received $430,000 cash from the sale of the building. Depreciation is computed on a straight-line basis. The building has a 40-year useful life and a residual value of $45,000. Dec. 31.
Recorded depreciation as follows:
Communication equipment is depreciated by the straight-line method over a five-year life with zero residual value. Office equipment is depreciated using the double-declining-balance method over five years with a $4,000 residual value.

Answer 1

Answer:

Jan 1

Dr Office equipment 119,000

Cr Cash 84,000

Cr Note payable 35,000

April 1

Dr Land 240,000

Dr Communication equipment 80,000

Cr Cash 320,000

Sept 1

Dr Cash 430,000

Dr Accumulated depreciation -Building 265,000

Cr Building 570,000

Cr Gain on sales of building 125,000

Dec 31

Depreciation expenses 12,000

Dr Accumulated Depreciation 12,000

Explanation:

Granny Carney Associates Journal entries

Jan 1

Dr Office equipment 119,000

Cr Cash 84,000

Cr Note payable 35,000

(119,000-84,000)

April 1

Dr Land 240,000

(320,000×252,000/252,000+84,000)

Dr Communication equipment 80,000

(320,000×84,000/252,000+84,000)

Cr Cash 320,000

(80,000+240,000)

Sept 1

Dr Cash 430,000

Dr Accumulated depreciation -Building 265,000

Cr Building 570,000

Cr Gain on sales of building 125,000

Dec 31

Depreciation expenses 12,000

(80,000-0)/5×9months/12months

Dr Accumulated Depreciation 12,000