Problem 8-35 Fixed Asset Transactions and Reporting A partial portion of the bal
ID: 2569087 • Letter: P
Question
Problem 8-35 Fixed Asset Transactions and Reporting A partial portion of the balance sheet at December 31, 2012, for the Gusto Corporation is presented below: Land Buildings Less: Accumulated depreciation Equipment Less: Accumulated depreciation Total property and equipment $500,000 $630,000 250,000 380,000 65,000 22,000 43,000 923,000 The following transactions occurred during 2013: .On January 1, retired equipment with a net book value of $2,000. The equipment was purchased for $8,000. No value was received from the retirement. On January 1, Gusto sold a building with an original 30-year useful life and no estimated salvage value for $90,000 cash. The building was originally purchased on December 31, 2002 for $120,000 .Purchased land for $90,000 on April 30 .On July 1, Gusto purchased equipment for $30,000 by signing a long-term note payable . Prepared depreciation entries on December 31. Depreciation expense for the year was $40,000 for buildings and $4,500 for equipment. Required Hide a. Prepare journal entries to record all of the above transactions. For a compound transaction, if an amount box does not require an entry, leave it blank or enter O Jan. 1 Equipment Accumulated Depreciation-Ec Equipment Depreciation ExpenseExplanation / Answer
Jan1. Retiring Equipment-:
Accumulated Dep. On Equipment A/c Dr 6,000
Loss on Disposal of Equipment A/c Dr 2,000
To Equipment A/c 8,000
(Being Equipment retired from business)
Jan1. Building Sale-:
Cash A/c Dr 90,000
Acc. Dep on Building Dr 90,000
To Building A/c 90,000
To Gain on Sale of Building 90,000
(Being Building Sold)
Apr 30. Land Purchased
Land A/c Dr 90,000
To Party A/c 90,000
(Being Land purchased)
July 1. Equipment
Equipment A/c Dr 30,000
To Long Term Note Payable 30,000
(Being Equipment purchased on Loan)
Dec 31. Depreciation Accounting
Depreciation A/c Dr 44,500
To Acc. Dep on Equipment A/c 4,500
To To Acc. Dep on Building A/c 40,000
(Being Depreciation charged on Assets)
Dec 31. Expenses Transfer to P/L
Profit and Loss A/c Dr 46,500
To Depreciation Expenses 44,500
To Loss on Disposal of Equipment 2,000
(Being Expenses transferred to P/L)
Balance Sheet(Extract) as on 31/12/13
Building
5,40,000.00
Acc. Dep
- 1,60,000.00
3,80,000.00
Equipment
57,000.00
Acc. Dep
- 16,000.00
41,000.00
Balance Sheet(Extract) as on 31/12/13
Building
5,40,000.00
Acc. Dep
- 1,60,000.00
3,80,000.00
Equipment
57,000.00
Acc. Dep
- 16,000.00
41,000.00