You are auditing the financial statements of the Ute Corporation for the year ended December 31, 1999. The client has prepared the following schedules for the fixed assets and depreciation accounts. You have agreed the opening balances with the general ledger and with your prior year's working papers.

Your audit reveals the following information:

a. All equipment is depreciated on the straight-line basis (no salvage value) based on the following estimated lives: buildings, 25 years; all other items, 10 years.
Company policy is to take one-half year's depreciation on all asset acquisitions and disposals during the year.

b. On April 1, the company entered into a ten-year lease contract for a die-casting machine with annual rentals of \($5,000\) payable in advance every April 1. The lease is cancelable by either party (60 days written notice is required), and there is no option to renew the lease or to buy the equipment at the end of the lease. The estimated useful life of the machine is ten years with no salvage value. The company recorded the die-casting machine in the machinery and equipment account at \($40,400,\) the discounted present value at the date of the lease, and \($2,020,\) applicable to the machine, has been included in depreciation expense for the year.

c. The company completed the construction of a wing on the factory building on June 30, although the useful life of the building was not extended. The lowest construction bid received was \($175,000,\) the amount recorded in the buildings account.
Company personnel were used to construct the addition at a cost of \($160,000\) (materials, \($75,000;\) labor, \($55,000;\) and overhead, \($30,000).\)

d. On August 18, \($15,000\) was paid for paving and fencing a portion of land owned by the company and used as a parking lot for employees. The expenditure was charged to the land account.

e. The amount shown in the machinery and equipment retirement column represents cash received on September 5 upon disposal of a machine purchased in July 1998 for \($48,000.\) The accountant recorded depreciation expense of \($3,500\) on this machine in 1999.

f. Crux City donated land and a building, appraised at \($100,000\) and \($400,000,\) respectively, to the Ute Corporation for a plant. On September 1, the company began operating the plant. Because no costs were involved, no entry was made for the transaction.

Required:

Prepare the formal adjusting journal entries that you would suggest at December 31, 1999, to adjust the accounts for transactions (a) to (f). The books have not been closed. Round computations to the nearest dollar.

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Ute Corporation Analysis of Fixed Assets and Related Allowance for Depreciation Accounts Year Ended December 31, 1999 Description Land Buildings Final 12/31/98 Additions Retirements $ 22,500 120,000 $ 15,000 175,000 Per Books 12/31/99 $ 37,500 295,000 Machinery and Equipment 385,000 40,400 $26,000 399,400 $26,000 $731,900 Description $527,500 $230,400 Allowance for Depreciation Final 12/31/98 Additions* Retirements Per Books 12/31/99 Buildings $ 60,000 Machinery and Equipment 173,250 $ 8,300 39,220 $233,250 $ 47,520 $ 68,300 212,470 $280,770 "Depreciation expense for the year.