Depreciating Plant Assets: Can anyone please tell me where I am going wrong?
This problem is kind of long but here goes.
At December 31, 2008, Jimenez Company reported the following as plant assets.
Land $ 4,000,000
Buildings $28,500,000 Less: Accumulated depreciation - buildings 12,100,000 16,400,000
Equipment 48,000,000 Less: Accumulated depreciation - equipment 5,000,000 43,000,000 Total plant assets $63,400,000
During 2009, the following selected cash transactions occurred.
April 1 Purchased land for $2,130,000.
May 1 Sold equipment that cost $780,000 when purchased on January 1, 2005. The equipment was sold for $450,000.
June 1 Sold land purchased on June 1, 1999, for $1,500,000.The land cost $400,000.
July 1 Purchased equipment for $2,000,000.
Dec. 31 Retired equipment that cost $500,000 when purchased on December 31, 1999. No salvage value was received.
Instructions
(a) Journalize the above transactions.The company uses straight-line depreciation for buildings and equipment.The buildings are estimated to have a 50-year 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 2009.
(c) Prepare the plant assets section of Jimenez%u2019s balance sheet at December 31, 2009.
given: (b) Depreciation Expense - building $570,000; equipment $4,772,000
(c) Total plant assets $61,270,000
Apr.1 Land Purchase (Debit) 2,130,000
Cash (Credit) 2,130,000
May 1 Depreciation Expense (Debit) 26,000
= (780,000x.10x4/12)
Accumulated Depreciation Exp (Credit) 26,000
Cash (Debit) 450,000
Accumulated Depreciation Exp (78,000x4 + 26,000) (Debit) $338,000
Equipment (credit) 780,000
Gain on Disposal (credit) 8,000
June 1 Cash (Debit) 1,500,000
Land (credit) 400,000
Gain on Disposal (credit) 1,100,000
July 1 Equipment (debit) 2,000,000
Cash (credit) 2,000,000
Dec 31 Depreciation Expense (debit) 100,000
Accumulated Depreciation (credit) 100,000
Accumulated Depreciation (debit) 500,000
Equipment (credit) 500,000
Depreciation Exp (debit) 570,000
Accumulated Depreciation (credit) 570,000
Accumulated depreciation = 5,000,000
-338,000-500,000(debits) = 838,000
100,000+26,000=126,000
Depreciation would total 4,288,000 (I don't understand where I am going wrong)
