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At December 31 2011 Starkey Company reported the following as plant assets Land $ 2000000 Buildings $2000000 Less Accumulated depreciation buildings 8000000 12000000 Equipment

At December 31, 2011, Starkey Company reported the following as plant assets.

Land

 

$ 2,000,000

Buildings

$20,000,000

 

Less: Accumulated depreciation—buildings

8,000,000

12,000,000

Equipment

30,000,000

 

Less: Accumulated depreciation—equipment

$20,000,000

26,000,000

Total plant assets

 

$40,000,000

During 2012, the following selected cash transactions occurred.

April 1 Purchased land for $1,200,000.

May 1 Sold equipment that cost $420,000 when purchased on January 1, 2008.The equipment was sold for $240,000.

June 1 Sold land purchased on June 1, 2002, for $1,000,000.The land cost $340,000.

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

Dec. 31 Retired equipment that cost $300,000 when purchased on December 31, 2002. No salvage value was received.

Instructions

(a) Journalize the above transactions. Starkey uses straight-line depreciation for buildings and equipment. The buildings are estimated to have a 50-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 2012.

(c) Prepare the plant assets section of Starkey’s balance sheet at December 31, 2012.

May 21 2020 View more View Less

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