Question

Practice Assignment Gradebook ORION Downloadable eTextbook ignment Question 2 At January 1, 2018, Cullumber Limited reported the following property, plant, and equipment accounts: Accumulated depreciation-buildings 559,500,000 Accumulated depreciation equipment 50,700,000 Buildings 99,300,000 Equipment 140,000,000 Land 20,700,000 The company uses straight-line depreciation for buildings and equipment, its year end is December 31, and it makes adjusting entries annually. The buildings are estimated to have a 40-year useful life and no residual value; the equipment is estimated to have a 10-year useful life and no residual value During 2018, the following selected transactions occurred: Apr. 1 May June 1 1 Purchased land for $4,240,000. Paid $1,190,000 cash and issued a three-year, 7% mortgage payable for the balance. Interest on the mortgage is payable annually each April Sold equipment for $330,000 cash. The equipment cost $2,562,000 when originally purchased on January 1, 2010 Sold land for $3,823,100. Received $837,500 cash and accepted a three-year, 5% note for the balance. The land cost $1,600,000 when purchased on June 1, 2012. Interest on the note is due annually each June 1. Purchased equipment for $2,200,000 cash. Retired equipment that cost $1,000,000 when purchased on January 1, 2009. No proceeds were received Tested land for impairment and found that its recoverable value was $20,700,000. July 1 Dec. 31 Record the above transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. It entry is required select "No Entry for the account titles and enter for the amounts. Round answers to decimal places . 275. Recordjoumal entries in the order presented in the problem.) John Wiley & Sons, Inc. Policy 1 R 2000-2020 John Wiles

Answer 1

Jounal Entry- Cullumber Limited
S. No.	DATE	Account Title	Debit	Credit
1	1-Apr	Land	$4,240,000.00
		Cash		$1,190,000.00
		7% Note Payable (bal)		$3,050,000.00
		To Record Purchase of Land
2	1-May	Depreciation- Equipment	$85,400.00
		Accumulated Depreciation on Equipment (2562000/10)/12*4		$85,400.00
		To Record Depreciation for 4 Month
3	1-May	Cash	$330,000.00
		Accumulated Depreciation on Equipment (2562000/10*7)+85400	$1,878,800.00
		Loss On Disposal (bf)	$353,200.00
		Equipment		$2,562,000.00
		TO Record Sales of Equipment
4	1-Jun	Cash	$837,500.00
		5% Note Receivable (3823100-837500)	$2,985,600.00
		Land		$1,600,000.00
		Gain On Disposal		$2,223,100.00
5	1-Jul	Equipment	$2,200,000.00
		Cash		$2,200,000.00
		To Record Purchase of Equipment
6	31-Dec	Depreciation- Equipment	$100,000.00
		Accumulated Depreciation on Equipment (1000000/10)		$100,000.00
		To Record Depreciation on Retired Equipment
7	31-Dec	Accumulated Depreciation on Equipment	$1,000,000.00
		Equipment		$1,000,000.00
		To Record Fully Depreciated Asset Retired
	Adjusting entries a Dec 31
1	31-Dec	Depreciation on Building ( 99300000/40)	$2,482,500.00
		Accumulated depreciation o Building		$2,482,500.00
		To Record Dep on Building
2	31-Dec	Depreciation on Equipment (140000000-2562000-1000000)/10+ (2200000/10*6)	$14,963,800.00
		Accumulated depreciation on Equipment		$14,963,800.00
		To Record Dep on Equipment
3	31-Dec	Interest expense (3050000*7%*9/12)	$160,125.00
		Interest Payable		$160,125.00
		To Record Interest Payable
4	31-Dec	Interest Receivable	$87,080.00
		Interest Revenue (2985600*5%*7/12)		$87,080.00
		To Record Interest Received
		Cullumber CO.
		Statement of Financial Position(Partial)
		Dec 31 2018
		Property,Plant & Equipment
		Land (20700000+4240000-1600000)		$23,340,000
		Buildings	$99,300,000
		Less:Accumulated Depreciation on Buildings (59500000+2482500)	$61,982,500	$37,317,500
		Equipment (140000000-2562000+2200000-1000000)	$138,638,000
		Less:Accumulated Depreciation (50700000+85400-1878800+100000-1000000+14963800	$62,970,400	$75,667,600
		Total Property,Plant & Equipment		$136,325,100