Question

Question 5 Assume Interstellar Communications Ltd.'s balance sheet includes the following assets under Property Plant, and Equipment: Land, Buildings, and Motor-Carrier Equipment. Interstellar Communications has a separate accumulated depreciation account for each of these assets except land. Further, assume that Interstellar completed the following transactions: . Jan 2: Sold motor-carrier equipment with accumulated depreciation of $67,000 (cost of $130,000) for $70,000 cash. Purchased similar new equipment with a cash price of $176,000. July 3: Sold a building that had cost $650,000 and had accumulated depreciation of $145,000 through December 31 of the preceding year. Depreciation is computed on a straight line basis The building had a 40-year useful life and a residual value of $250,000. Interstellar received $100,000 cash and a $400,000 note receivable. Oct 29: Purchased land and a building for a single price of $420,000. An independent appraisal valued the land at $150,000 and the building at $300,000 • Dec 31: Recorded depreciation as follows: New motor-carrier equipment has an expected useful life of six years and an estimated residual value of 5% of cost. Depreciation is computed on the double-diminishing balance method. Depreciation on buildings is computed by the straight-line method. The new building carries a 40-year useful life and a residual value equal to 10% of its cost.

please journalize the each transaction from jan 2 to dec 31st.

Answer 1

Questions Answer Page: No O. losone மக்க On January a Cash Dr = $70,000 Accumulated depreciation. Ori - $ 64000 Gain on sale of equipment G. 70,000 +67000 -- 130,000 = $ #000 . Motor courier equipment G.= $ 130,000 new equipment with cash price = $146000 On July 3 Depreciation 650,000 - 250.000 v6 hoycarus Jan to Joly 6 months - 400,000 x 40 3 $ 5000 Given , cash = $100,000 Note receivable = $ 400,000

Accumulated depreciation Page: No @ = $145000 + $5000 = $ 150,000 Building = 100,000 + 400,000 + 150,000 = $ 650,000 .. Land =150.00 building = 300,000 on oct 29 150,000 hand = 420,000 X T 450.000 + 300,000 = 420,000 X 150,000 450,000 2. $ 140,000 300,000 Building = 420,000 x 150,000 + 300,000 420,000 X 300,000 : 450,000 = $280,000 cash = ' 140,000 + 280,000 = $420,000 On dec 3) Depreciation on new motor -- Casocier-equipment = depreciation ralex book value or cort at beginning

Page.no ☺ balante method Depreciation orale as per double diminishing Lexa 6 year = 0.333333 = 33.3333% New equipment cost price = $176000 - Depreciation on new motor Carrier equipment = 33.3333% X 16000 = $176000 X 0.333333 = 58666:608 ã 58667 1 dec 31 Depreciation of building - acting = cost - residual value 2 Cocta a to useful life 2 months 280.000 = (1099,4 280,000) x = 40 years 252000 x 40 = $1050

pate Account title Cash Page: No 9 Debit Credit $ 40,000 $ 67,000 $ 4000 $130,000 $146000 $146000 $5000 $5000 Tan a Accumulated depreciation Gain on sale of equipment Motor Courier equipment Motor Carrier equipment - Cash Depreciation Accumulated depreciation. Cash Note Sieceivable Accumulated depreciation Building loct 29 | Land Building cash Dec 31 Depreciation Accumulated depreciation Depreciation Accumulated depreciation $100,000 $ 400,000 $150,000 $ 650,000 $140,000 $280,000 $420,000 $58667 - $ 58667 $1050 $1050