Question

Blue Spruce Corp. had the following transactions.

1. Sold land (cost $8,240) for $10,300.
2. Issued common stock at par for $21,200.
3. Recorded depreciation on buildings for $12,400.
4. Paid salaries of $7,200.
5. Issued 1,200 shares of $1 par value common stock for equipment worth $8,100.
6. Sold equipment (cost $10,800, accumulated depreciation $7,560) for $1,296.
For each transaction above, prepare the journal entry.

Answer 1

1. Dr Cash $10,300

Cr Land $8,240

Cr Gain on Sale of Land $2,060

2. Dr Cash $21,200

Cr Common Stock $21,200

3. Dr Depreciation Expense $12,400

Cr Accumulated Depreciation - Building $12,400

4. Dr Salaries Expense $7,200

Cr Cash $7,200

5. Dr Equipment $8,100

Cr Common Stock $1,200

Cr Additional Paid-in Capital $6,900

6 Dr Cash $1,296

Dr Loss on Sale of Equipment $1,944

Dr Accumulaed Depreciation -Equipment $7,560

Cr Equipment $10,800

Step-by-step explanation:

Preparation of the journal entry.

1. Dr Cash $10,300

Cr Land $8,240

Cr Gain on Sale of Land $2,060

($10,300-$8,240)

2. Dr Cash $21,200

Cr Common Stock $21,200

3. Dr Depreciation Expense $12,400

Cr Accumulated Depreciation - Building $12,400

4. Dr Salaries Expense $7,200

Cr Cash $7,200

5. Dr Equipment $8,100

Cr Common Stock $1,200

(1,200*$1)

Cr Additional Paid-in Capital $6,900

($8,100-$1,200)

6 Dr Cash $1,296

Dr Loss on Sale of Equipment $1,944

($10,800-$7,560-$1,296)

Dr Accumulaed Depreciation -Equipment $7,560

Cr Equipment $10,800