HOMEWORK – CHAPTER 9
E9-3:
(a)
Land
Cash price of property $80,000
Demolished cost of old warehouse 8,200
Attorney’s fees 1,900
Real estate broker’s fee 5,200
Less: Salvaged materials value $1,700
Cost of Land $93,600
(b) The architect fee should be debited to the building account. The cost of driveways and a
parking lot should be debited to land improvement account.
E9-8:
Jan. 1 Accumulated Depreciation 62,000
Machinery 62,000
Jun. 30 Depreciation Expense ( $ 36,000 ÷36 × 30) 30,000
Accumulated Depreciation – Equipment 30,000
Jun. 30 Cash 5,000
Accumulated Depreciation – Equipment 30,000
Loss on Disposal of Plant Assets 1,000
Equipment 36,000
Dec. 30 Depreciation Expense [ ( $ 25,000−4,000 ) ÷ 5 ×4 ] 16,800
Accumulated Depreciation – Equipment 16,800
Dec. 30 Cash 9,000
Accumulated Depreciation – Equipment 16,800
Gain on Disposal of Plant Assets 800
Equipment 25,000
P9-2A:
(a) Journalize 2018 transactions
Apr. 1 Land 2,200,00
0
Cash 2,200,000
May 1 Depreciation Expense ( $ 600,000 ÷120 × 4) 20,000
Accumulated Depreciation – Equipment 20,000
May 1 Cash 170,000
Accumulated Depreciation – Equipment 440,000
Gain on Disposal of Plant Assets 10,000
Equipment 600,000
Jun. 1 Cash 1,600,00
0
Gain on Disposal of Plant Assets 600,000
Land 1,000,000
Jul. 1 Equipment 1,100,00
0
Cash 1,100,000
Dec. 31 Depreciation Expense ( $ 700,000÷ 10) 70,000
Accumulated Depreciation – Equipment 70,000
Dec. 31 Accumulated Depreciation – Equipment 700,000
Equipment 700,000
(b) Adjusting entries:
Dec. Depreciation Expense ( $ 26,500,000 ÷ 40)
6,625,000
31
Accumulated Depreciation – Building 6,625,000
Dec. 31 Depreciation Expense 3,980,00
0
Accumulated Depreciation – Equipment 3,980,000
(c) Plant Assets section of Balance Sheet:
Arnold Corporation
Balance Sheet
December 31, 2018
Property, Plant, Equipment
Land ( $ 3,000,000+$ 2,200,000−$ 1,000,000 ) $4,200,000
Buildings $26,500,000
Less: Accumulated Depreciation 18,550,000 7,950,000
( $ 11,925,000+ $ 6,625,000 )
Equipment 39,800,000
( $ 40,000,000+ $ 1,100,000−$ 600,000−$ 700,000 )
Less: Accumulated Depreciation 7,930,000 31,870,000
( $ 5,000,000+$ 20,000−$ 440,000+ $ 70,000−$ 700,000+ $ 3,980,000 )
Total Property, Plant, Equipment 50,037,500
P9-4A:
(a)
Apr. 1 Land 4,400,00
0
Cash 1,100,000
Notes Payable 3,300,000
May 1 Depreciation Expense 93,333
Accumulated Depreciation – Equipment 93,333
May 1 Cash 300,000
Accumulated Depreciation – Equipment 2,333,333
Loss on Disposal of Plant Assets 166,667
Equipment 2,800,000
June 1 Cash 900,000
Notes Payable 2,700,000
Gain on Disposal of Plant Asset 2,200,000
Land 1,400,000
July 1 Equipment 2,200,00
0
Cash 2,200,000
Dec. 31 Depreciation Expense ( $ 1,000,000÷ 10) 100,000
Accumulated Depreciation 100,000
Dec. 31 Accumulated Depreciation – Equipment 1,000,00
0
Equipment 1,000,000
(b)
Dec. Depreciation Expense ( $ 97,400,000 ÷ 40)
2,435,000
31
Accumulated Depreciation – Building 2,435,000
Dec. Depreciation Expense
14,730,000
31
Accumulated Depreciation – Equipment 14,730,000
Dec. 9
Interest Expense ( $ 3,300,000× 6 % × ) 14,580,000
12
31
Interest Payable 14,580,000
Dec. 7
Interest Expense ( $ 2,700,000 ×5 % × ) 78,750,000
12
31
Interest Payable 78,750,000
(c)
Youngstown Company
Balance Sheet
December 31, 2017
Property, Plant, Equipment
Land ( $ 20,000,000+$ 4,400,000−$ 1,400,000 ) $23,000,000
Buildings $97,400,000
Less: Accumulated Depreciation 64,635,000 32,765,000
( $ 62,200,000+$ 2,435,000 )
Equipment 148,400,000
( $ 150,000,000+$ 2,200,000−$ 2,800,000−$ 1,000,000 )
Less: Accumulated Depreciation 65,590,000 82,810,000
( $ 54,000,000+$ 93,333+$ 100,000+ $ 14,730,000−$ 2,333,333−$ 1,000,000 )
Total Property, Plant, Equipment 138,575,000