P9-5B At December 31, 2011, Starkey Company reported the following as plant assets.

At December 31, 2011, Starkey Company reported the following as plant assets.

Land		$ 2,000,000
Buildings	$20,000,000
Less: Accumulated depreciation—buildings	8,000,000	12,000,000
Equipment	30,000,000
Less: Accumulated depreciation—equipment	4,000,000	26,000,000
Total plant assets		$40,000,000

During 2012, the following selected cash transactions occurred.

April 1	Purchased land for $1,200,000.
May 1	Sold equipment that cost $420,000 when purchased on January 1, 2008. The equipment was sold for $240,000.
June 1	Sold land purchased on June 1, 2002, for $1,000,000. The land cost $340,000.
July 1	Purchased equipment for $1,100,000.
Dec. 31	Retired equipment that cost $300,000 when purchased on December 31, 2002. No salvage value was received.

Journalize a series of equipment transactions related to purchase, sale, retirement, and depreciation.

Instructions

(a) Journalize the above transactions. Starkey uses straight-line depreciation for buildings and equipment. The buildings are estimated to have a 50-year useful 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.

(b) Record adjusting entries for depreciation for 2012.

Check answers: Depreciation expense—

Building $400,000;

Equipment $2,983,000

check Answer: Total plant assets $38,295,000

13 years ago

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