Whitney Plumb Associates surveys American eating habits. The companys accounts include Land, Buildings, Office Equipment, and Communication
Question:
Whitney Plumb Associates surveys American eating habits. The company’s accounts include Land, Buildings, Office Equipment, and Communication Equipment, with a separate Accumulated Depreciation account for each asset. During 2024, Whitney Plumb completed the following transactions:
Record the transactions in the journal of Whitney Plumb Associates.
Jan. 1 Purchased office equipment, $117,000. Paid $77,000 cash and financed the remainder with a note payable. Sep. 1 Apr. 1 Acquired land and communication equipment in a lump-sum purchase. Total cost was $350,000 paid in cash. An independent appraisal valued the land at $275,625 and the communication equipment at $91,875. Sold a building that cost $520,000 (accumulated depreciation of $285,000 through December 31 of the preceding year). Whitney Plumb received $390,000 cash from the sale of the building. Depreciation is computed on a straight-line basis. The building has a 40-year useful life and a residual value of $25,000. Dec. 31 Recorded depreciation as follows: Communication equipment is depreciated by the straight-line method over a five-year life with zero residual value. Office equipment is depreciated using the double-declining-balance method over five years with a $2,000 residual value.
Step by Step Answer:
Date Jan 1 Accounts and Explanation Office Equipment Cash Note Payable To record purchase of office ...View the full answer
Horngrens Accounting The Financial Chapters
ISBN: 9780136162186
13th Edition
Authors: Tracie Miller Nobles, Brenda Mattison
Related Video
In accounting terms, depreciation is defined as the reduction of the recorded cost of a fixed asset in a systematic manner until the value of the asset becomes zero or negligible. An example of fixed assets are buildings, furniture, office equipment, machinery, etc. The land is the only exception that cannot be depreciated as the value of land appreciates with time. Depreciation allows a portion of the cost of a fixed asset to be the revenue generated by the fixed asset. This is mandatory under the matching principle as revenues are recorded with their associated expenses in the accounting period when the asset is in use. This helps in getting a complete picture of the revenue
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