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At December 31, 2011, Starkey Company reported the following as plant assets.
| Land $ 2,000,000Buildings$20,000,000 Less: Accumulated depreciation—buildings8,000,00012,000,000Equipment30,000,000 Less: Accumulated depreciation—equipment4,000,00026,000,000Total 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
(c) Prepare the plant assets section of Starkey’s balance sheet at December 31, 2012.
check Answer: Total plant assets $38,295,000
