Accounting Chapter 9 Homework Accounts Post Beginning Balances A And Then

E9-5 Determine straight line depreciation for partial period

Gotham Company purchased a new machine on October 1, 2017, at a cost of $90,000. The company

estimated that the machine has a salvage value of $8,000. The machine is expected to be used for

70,000 working hours during its 8-year life.

Instructions

Compute the depreciation expense under the straight-line method for 2017 and 2018, assuming a

December 31 year-end.

NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a “?” .

Cost Value

Salvage value Value

Depreciable cost ?

Useful life 8 years

Annual depreciation ?

2017 Depreciation Value X 3/12 = Value

2018 Depreciation Value

After you have completed E9-5, consider the additional question.

1. Assume that the cost of the new machine changed to $85,000. Determine the impact of this change

on 2017 and 2018 depreciation.

E9-5 Solution

Cost $90,000

Salvage value 8,000

E9-5 Solution to additional question

1. Assume that the cost of the new machine changed to $85,000. Determine the impact of this change

on 2017 and 2018 depreciation.

Cost $85,000

Salvage value 8,000

E9-7 Journalize transactions related to disposals of plant assets

Thieu Co. has delivery equipment that cost $50,000 and has been depreciated $24,000.

Instructions

Record entries for the disposal under the following assumptions.

(a) It was scrapped as having no value.

(b) It was sold for $37,000.

(c ) It was sold for $20,000

NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a “?” .

(a) Value

Value

(b) Value

Value

(c ) Value

Value

After you have completed E9-7, consider the following additional question.

1. Assume that the accumulated depreciation up to the time of disposal changed to $30,000. Show the impact

of this change on each of the scenario given.

Account

E9-7 Solution

(a) 26,000

24,000

Loss on Disposal of Plant Assets

Accumulated Depreciation –Equipment

Accumulated Depreciation – Equipment

Cash

Loss on Disposal of Plant Assets

Cash

E9-7 Solution to additional question

1. Assume that the accumulated depreciation up to the time of disposal changed to $30,000. Show the impact

of this change on each of the scenario given.

(a) 20,000

30,000

(c ) 30,000

Accumulated Depreciation – Equipment

Loss on Disposal of Plant Assets

Accumulated Depreciation -Equipment

Accumulated Depreciation – Equipment

P9-2A Journalize equipment transactions related to purchase, sales, retirements and depreciation

At December 31, 2017, Arnold Corporation reported the following plant assets.

Land $3,000,000

Buildings $26,500,000

Less: Accumulated depreciation -buildings 11,925,000 $14,575,000

Equipment 40,000,000

Less: Accumulated depreciation -equipment 5,000,000 35,000,000

Total plant assets $52,575,000

During 2018, the following selected cash transactions occurred.

Apr. 1 Purchased land for $2,200,000.

May 1 Sold equipment that cost $600,000 when purchased on January 1, 2011.

The equipment was sold for $170,000.

June 1 Sold land for $1,600,000. The land cost $1,000,000.

July 1 Purchased equipment for $1,100,000.

Dec. 31 Retired equipment that cost $700,000 when purchased on December 31,

2008. No salvage value was received.

Instructions

(a)

Journalize the transactions. (Hint: You may wish to set up T-accounts, post beginning balances,

and then post 2018 transactions.) Arnold uses straight-line depreciation for buildings and

equipment. The buildings are estimated to have a 40-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 2018.

(c) Prepare the plant assets section of Arnold’s balance sheet at December 31, 2018.

NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a “?” .

(a) April 1 Value

Value

May 1 Value

Value

May 1 Value

Value

June 1 Value

Value

Account

July 1 Value

Value

Dec. 31 Value

Value

31 Value

Value

(b) Dec. 31 Value

Value

Dec 31 Value

Value

(c )

Plant Assets

Land Value

Buildings Value

Less: Accumulated depreciation – buildings Value ?

Equipment Value

Less: Accumulated depreciation – equipment Value ?

Total plant assets ?

6/1/17

12/31/18 Bal.

12/31/17

12/31/18 Bal.

12/31/17 05/01/18

07/01/18 12/31/18

Value

Equipment

Value

December 31, 2018

Land

Value

Buildings

12/31/17

04/01/18

Account

ARNOLD CORPORATION

Partial Balance Sheet

Account

12/31/18 Bal.

12/31/17

12/31/18

12/31/18 Bal.

05/01/18 12/31/17

12/31/18 05/01/18

12/31/18

12/31/15 Bal.

After you have completed P9-2A, consider the following additional question.

1. Assume that the selling price of equipment and land changed to $168,000 and $1,300,000 respectively.

Show the impact of these changes on the journal entries.

Value

Accumulated Depreciation – Building

Value

Accumulated Depreciation – Equipment

Value

Accumulated Depreciation – Equipment

Equipment

P9-2A Solution

(a) April 1 2,200,000

2,200,000

June 1 1,600,000

1,000,000

600,000

Land

Cash

Land

Gain on Disposal of Plant Assets

Accumulated Depreciation – Equipment

(b) Dec. 31 662,500

662,500

($26,500,000 x 1/40)

(c )

Plant Assets*

Land $4,200,000

Buildings 26,500,000

Less: Accumulated depreciation – buildings 12,587,500 13,912,500

6/1/17

Land

12/31/17

3,000,000

1,000,000

December 31, 2018

Depreciation Expense

Accumulated Depreciation – Building

ARNOLD CORPORATION

Partial Balance Sheet

Depreciation Expense

Accumulated Depreciation – Equipment

12,587,500

12/31/17

12/31/18

Accumulated Depreciation – Building

11,925,000

662,500

700,000

1. Assume that the selling price of equipment and land changed to $168,000 and $1,300,000 respectively.

Show the impact of these changes on the journal entries.

(a) May 1 Accumulated Depreciation – Equipment 440,000

Cash 168,000

Equipment 600,000