Question

The following transactions occurred during 2017. Assume that depreciation of 10% per year is charged on all machinery and 5% per year on buildings, on a straight-line basis, with no estimated salvage value. Depreciation is charged for a full year on all fixed assets acquired during the year, and no depreciation is charged on fixed assets disposed of during the year.

Jan. 30 A building that cost $139,920 in 2000 is torn down to make room for a new building. The wrecking contractor was paid $5,406 and was permitted to keep all materials salvaged.
Mar. 10 Machinery that was purchased in 2010 for $16,960 is sold for $3,074 cash, f.o.b. purchaser’s plant. Freight of $318 is paid on the sale of this machinery.
Mar. 20 A gear breaks on a machine that cost $9,540 in 2009. The gear is replaced at a cost of $2,120. The replacement does not extend the useful life of the machine but does make the machine more efficient.
May 18 A special base installed for a machine in 2011 when the machine was purchased has to be replaced at a cost of $5,830 because of defective workmanship on the original base. The cost of the machinery was $15,052 in 2011. The cost of the base was $3,710, and this amount
was charged to the Machinery account in 2011.
June 23 One of the buildings is repainted at a cost of $7,314. It had not been painted since it was constructed in 2013.

Required:
Prepare general journal entries for the transactions.

Answer 1

Answer: See explanation

Step-by-step explanation:

The following can be further found in the journal attached:

On January 30th:

Accumulated depreciation on building:

= 139,920 × 5% × 17years

= 139,920 × 0.05 × 17

= 118932

On 10th March:

Accumulated depreciation on machinery:

= 16960 × 10% × 7

= 16960 × 0.1 × 7

= $11872

Cash: 3074 - 318 = $2756

Loss of disposal on plants asset:

= 16960 - (11872 + 2756)

= 16960 - 14628

= 2332

On 18th May:

Accumulated depreciation machinery:

= $3710 × 10% × 6 years

= $3710 × 0.1 × 6

= $2226

Loss of disposal on assets:

= 3710 - 2226

= $1484

The journal has been attached.