Question

Exercise 12-03 Sheridan Corporation had the following transactions. Sold land (cost $11,300) for $14,300. 1. Issued common stock at par for $20,000. 2. Recorded depreciation on buildings for $16,300. 3. Paid salaries of $8,300. 4. Issued 1,200 shares of $1 par value common stock for equipment worth $9,600. 5. Sold equipment (cost $9,200, accumulated depreciation $6,440) for $1,104. 6. (a) For each transaction above, prepare the journal entry. (Credit account titles are automatically indented when amount Transaction Account Titles and Explanation Debit Credit 1. 2. 3. 4. 5.

Answer 1

Debit Credit 14,300 $ 11,300 $ 3.000 20.000 $ 20,000 16,300 $ 16,300 a. Transaction Account Title and Explanation Cash Land Gain on sale of Land Cash Common stock Deptreciation Expense Accumulated Depreciation - Building Salaries Expense Cash Equipment Common stock Additional Paid-in Capital Cash Loss on Sale of Equipment Accumulated Depreciation - Equipment Equipment 8,300 $ 8,300 9.600 $ 1.200 $ 8.400 1,104 1.656 6.440 $ 9,200

Increase Decrease Increase Increase 14300 3000 20000 16300 Cash Receipt Gain on Disposal of plant asset Cash Receipt Depreciation Expense Salaries and Wages Expense Common stock for Equipment Cash Receipt Loss on disposal of plant asset Investing Activity Operating Activity Financing Activity Operating Activity No Effect in Indirect Method No Effect in Indirect Method Investing Activity Operating Activity Increase Increase 1104 1656 Working Notes: Gain on sale of Land = $14,300-$11,300= $3,000 Common stock = 1.200*1 = $1,200 Additional paid in capital = $9,600-$1,200 = $8,400 Loss on Sale of Equipment = $9.200-$1,104-$6,440 = $1,656 6