You purchased a building, equipment and a truck for $700,000 cash. The building has an appraisal...

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Question

You purchased a building, equipment and a truck for $700,000 cash. The building has an appraisal...

You purchased a building, equipment and a truck for $700,000 cash. The building has an
appraisal value of $400,000, the equipment $300,000 and a truck appraised at $100,000
Determine the cost to be assigned to each asset and prepare the journal entry to make
the purchase.

JOURNAL ENTRY






The building has a 20 year life expectancy and a $25,000 salvage value. It will be
depreciated using the straight-line method. Assume at the end of the 8th year
the building is sold for $150,000 cash
What is the journal entry to report the sale of the building.

Journal Entry: you will probably have extra lines.

business accounting

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Answer 1

Answer #1

You purchased a building, equipment and a truck for $700,000 cash. The building has a appraisal value of $400,000, the equipment $300,000 and a truck appraised at $100,000 Determine the cost to be assigned to each asset and prepare the journal entry to make the purchase.
	Appraised value	Weights	$700,000 x weights
Building	$ 400,000.00	50.00%	$ 350,000.00
Equipment	$ 300,000.00	37.50%	$ 262,500.00
Truck	$ 100,000.00	12.50%	$ 87,500.00
Total	$ 800,000.00	100%	$ 700,000.00

Journal entry
General Journal	Debit	Credit
Building	$ 350,000.00
Equipment	$ 262,500.00
Truck	$ 87,500.00
Cash		$ 700,000.00

The building has a 20 year life expectancy and a $25,000 salvage value. It will be depreciated using the straight-line method. Assume at the end of the 8th year the building is sold for $150,000 cash. What is the journal entry to report the sale of the building.
General Journal	Debit	Credit
Cash	$ 150,000.00
Accumulated Depreciation *(16250 x 8 years	$ 130,000.00
Loss on sale of building	$ 70,000.00
Building		$ 350,000.00

*Depreciation Expenses ( $350,000 - $25,000)/20 years	$ 16,250.00

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Answer 2

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