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11/21/2020 Problem 7-4

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Print by: SHADI SHADMAN Acct 621 Fall 2020 S21 / Assignment 1 for Acct621 Fall 2020

*Problem 7-4 At January 1, 2017, Wildhorse Co. reported the following property, plant, and equipment accounts:

Accumulated depreciation—buildings $64,000,000

Accumulated depreciation—equipment 54,400,000

Buildings 97,300,000

Equipment 150,800,000

Land 20,250,000

The company uses straight-line depreciation for buildings and equipment, its year-end is December 31, and it makes adjustments annually. The buildings are estimated to have a 40-year useful life and no salvage value; the equipment is estimated to have a 10-year useful life and no salvage value.

During 2017, the following selected transactions occurred:

Apr. 1 Purchased land for $4.60 million. Paid $1.150 million cash and issued a 3-year, 6% note payable for the balance. Interest on the note is payable annually each April 1.

May 1 Sold equipment for $300,000 cash. The equipment cost $3.12 million when originally purchased on January 1, 2009.

June 1 Sold land for $4.08 million. Received $900,000 cash and accepted a 3-year, 5% note for the balance. The land cost $1.30 million when purchased on June 1, 2011. Interest on the note is due annually each June 1.

July 1 Purchased equipment for $2.80 million cash.

Dec. 31 Retired equipment that cost $1 million when purchased on December 31, 2007. No proceeds were received.

Prepare a tabular summary that includes the property, plant, and equipment balances as of January 1, 2017. (If a transaction causes a decrease in Asse particular Asset, Liability or Equity item that was reduced.)

Assets

Cash + Notes Rec. + Interest Rec. + Land + Buildings - Accum. Depr. - Bldgs. + Equipment - Accum. D

Jan. 1 $ $ $ $ $ $ $ $

Record the above transactions in the tabular summary from part (a). (If a transaction causes a decrease in Assets, Liabilities or Stockholders' Equit

Assets

Cash + Notes Rec. + Interest Rec. + Land + Buildings - Accum. Depr. - Bldgs. + Equipment - Accum.

Jan. 1 $ $ $ $ $ $ $

Apr. 1

May 1

June 1

July 1

Dec. 31

Record any adjustments required at December 31. (If a transaction causes a decrease in Assets, Liabilities or Stockholders' Equity, place a negati

Assets

Cash + Notes Rec. + Interest Rec. + Land + Buildings - Accum. Depr. - Bldgs. + Equipment - Accum.

Jan. 1 $ $ $ $ $ $ $

Apr. 1

May 1

June 1

July 1

Dec. 31

11/21/2020 Problem 7-4

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Dec. 31 $

Dec. 31

Prepare the property, plant, and equipment section of the company’s statement of financial position at December 31. (List Property, Plant and Equipment in order of Land, Buildings and Equipment.)

WILDHORSE CO. Statement of Financial Position (Partial)